Some Clarity on Charity Fraud
ASK A SPECIALIST: HOW CAN I DONATE TO CHARITY AND AVOID FRAUD?
Answer by: Ann House, Utah State University Extension assistant
professor and area agent, 801-468-2846
On Jan. 14, the Federal Trade Commission issued a warning to consumers
donating to the tragedy in Haiti. The FTC cautions to choose carefully
when considering urgent appeals for aid in the news, online, at social
networking sites and through third parties such as a cell phone
carrier. They state that the best way to provide immediate help is to
donate money directly to established national relief organizations
that have the experience and means to deliver aid.
In the days after Hurricane Katrina, thousands of people
contributed millions of dollars to agencies collecting donations for
the victims. As the devastation along the Gulf Coast was played out
through the media, many people wanted help. Many well-known national
organizations quickly set up means to collect donations.
Unfortunately, some Americans found themselves prey to con artists who
took advantage of the emotions of the moment to solicit funds for
fraudulent charities that did not exist. The National Institute of
Justice issued a report on Hurricane Katrina fraud in September of
2007 and found that 41 U.S. attorneys responded to more than 14,000
fraud-related tips and complaints. (http://www.justice.gov/katrina/Katrina_Fraud/docs/09-04-07AG2ndyrprogrpt.pdf)
Utahns are well known for their compassion and generous offerings.
Unfortunately, Utahns are also well known for their high bankruptcy
rate, high debt-to- income ratio and for their susceptibility to
scammers. In fact, Utah ranks 8th in the nation in generosity
according to the Catalogue for Philanthropy Generosity Index as
reported by the Utah Foundation Research Report (2004). This ranking
compares each state’s income levels to its donation levels. Utah ranks
31st in income, or “having,” and is 2nd in donations, or “giving.” The
difference between these rankings creates a generosity index.
The following tips from the FTC will help generous consumers avoid
fraud when making charitable contributions.
• Be wary of appeals that tug at your heartstrings, especially pleas
involving patriotism and current events.
• Most legitimate charitable organizations have Web sites that show
where, when and how the donations are spent. Check out these
organizations so you can track progress.
• Ask what percentage of the donation is used to support the causes
described in the solicitation and what percentage is used for
administrative costs. This information can be obtained by going to the
Better Business Bureau’s Wise Giving Alliance at www.give.org.
• Discuss the donation with a trusted family member or friend before
committing any funds.
• Don’t provide credit card or bank account information until you have
reviewed all information from the charity and made the decision to
donate.
• Ask for a receipt showing the amount of the contribution and stating
that it is tax deductible.
• Understand that contributions made to a tax-exempt organization are
not necessarily tax deductible.
• Avoid cash gifts. They can be lost or stolen. For security and tax
record purposes, it is best to pay by a check made payable to the
beneficiary, not the solicitor.
• Be wary of groups selling merchandise claiming that all profits will
benefit victims. Some may be legitimate while others may have no
association with the organization they claim to represent and may be
using a charity’s name without approval.
• Remember that the need for contributions will be ongoing, and in the
months ahead, you will have many opportunities to provide support.
Take time to choose the recipients of your charitable giving to make
sure your dollars reach helping hands.
• For more information, contact the FTC at http://www.ftc.gov or the
Utah Division of Consumer Protection at http://www.commerce.utah.gov/dcp/
Or 801-530-6601. The National Crime Prevention Council has a brochure on
charity fraud at
http://www.ncpc.org/resources/files/pdf/fraud/Charitable%20Giving%20Done%20Wisely.pdf
*****
Direct column topics to Julene Reese, Utah State University Extension
writer, Logan, Utah, 84322-4900, 435-797-0810; julener@ext.usu.edu
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