by Kayla Sedbrook
The next time you consider making a charitable donation, check out the charity first. A recent lawsuit demonstrates that not all "charities" are what they seem: New York has sued the Coalition Against Breast Cancer (CABC), a fraudulent charity that allegedly raised $9.1 million over a five-year period but used hardly any of those funds for breast cancer programs (WalletPop July 1).
According to the lawsuit, the CABC claimed a nonexistent affiliation with a leading New York cancer center and sent fake pledge invoices to individuals who never agreed to donate money. The CABC stated that donations would support research, screenings, and seminars. Instead, contributions funded undeserved salaries and benefits, unnecessary fundraiser fees, and insider loans for CABC directors.
Fraudulent charities can employ all kinds of sneaky tactics, but there are ways to make sure your money is going to a good cause. The Federal Trade Commission, an agency of the United States government that works to promote consumer protection, offers this advice for checking out charities before making a donation:
Get as much information as possible. Legitimate charities should be able to give you detailed information about the charity's mission, how your donation will be used, and proof that your donation is tax-deductible. Ricardo from El Paso, Texas received a phone call about donating money to help children in an orphanage in Haiti. Ricardo decided to do a little research before donating his money to the organization when the person on the phone couldn't properly answer his questions. "For some reason, something felt a little off about the organization, so I made a couple phone calls and searched the web. I found out the organization was corrupt and attempts were being made to close them down. Thankfully I took a little time do research before I supported what I thought was a good thing."
Check with your state regulatory office. The National Association of State Charity Officials provides a list of state offices that regulate charitable organizations. Your state office can tell you whether the charity must be registered and how much of your donation goes to the charity vs. fundraising and management expenses.
Ask questions when the phone rings. Charities sometimes hire professional fundraisers to obtain donations and use part of the money received to pay the fundraiser's fees. If you receive a phone call soliciting a donation, ask if the caller is a paid fundraiser, whom they work for, and how much of your donation will go to the charity and to the fundraiser. If you're not satisfied with the answer-or if it's unclear-don't donate.
Verify where your money is going. If a charity claims that your donation will benefit a specific organization, call the organization independently to confirm.
Be wary of pledges you don't remember making. Phony charities might try to trick you into thinking you agreed to pledge money. When in doubt, check your records. If you don't remember making a pledge and can't find documentation to support it, steer clear of the charity.