How to Avoid a Charity Scam
Scammers never quit, even when you're trying to be altruistic. But you can avoid getting duped if you do your homework.
Whether you open your wallet throughout the year or when disaster strikes, scammers stand ready to take advantage of your charitable impulses. However, you can donate to relief efforts or any other cause that’s dear to your heart without getting duped. You just have to do your homework.
Vet the charity. Check reviews on watchdog websites, such as Charity Navigator and the Better Business Bureau’s Wise Giving Alliance. You can also check out GuideStar, which presents a snapshot, including balance-sheet data, program descriptions and links to financial documents. On GuideStar, charities are asked to answer five questions to assess their potential impact and five questions about board oversight and performance.
But it helps to keep some perspective on the reviewers, too. Don’t rely solely on one review to make a judgment, and you needn't immediately dismiss an organization that with low ratings or that isn’t profiled without doing more research on your own in the news, on the charity’s own website or through other review sites.
BBB also has a scam tracker system. Type in “charity” in the keyword search bar and you’ll see an index of the most recently reported scams via zip code.
Other checks. If you see a contact number listed on a solicitation, check if it matches what’s on the charity’s website. And, in the age of social media and crowdfunding campaigns, be extra vigilant. Websites such as GoFundMe guarantees that funds will go to the beneficiary, not the campaign organizer, and will refund up to $1,000 to donors if there is evidence of misuse. However, the cause itself could be fake, so always cross check the information across various platforms.
Donating Later and Taxes. If you’re unsure of how you want to deploy your funds right at this moment, you can set up a donor-advised fund (DAF) with money-management firms such as Charles Schwab and Fidelity. With a DAF, you make one large contribution to the fund (cash or assets) and can disperse the funds at a later time.
Remember to keep receipts of your donations to charities are tax deductible. When charities confirm your gift, they should indicate how much of it is tax deductible. (Note that donations to GoFundMe campaigns, when they're collected for a private individual or company, are not deductible.)