Charity Fraud: How Scammers Exploit Kind Hearts for Profit

When natural disasters strike, it’s normal for nonprofits to solicit donations. We saw this during the California wildfire, Hurricane Helene, and countless other events over the years.

Americans are typically quick to take out their wallets and help in whatever way they can when they see fellow citizens in trouble. But legitimate charities aren’t the only ones that go around seeking charitable donations in times of need. Scammers also take to the streets (sometimes, in the literal sense) to make a quick buck, exploiting people’s generosity.

Fake soliciting operations are fairly widespread these days. They’ve created lucrative avenues for criminals to dupe victims.

If you want your funds to go to the right places, keep reading to learn more about charity fraud and how you can evade it.

Charity Scams: Here’s How They Work

There are many different ways charity fraud can occur. Misappropriations in nonprofits, for example, happen when dishonest employees (say, a fundraiser or an accountant) redirect money for personal gain without others’ knowledge.

But often, it’s the scammers unrelated to legitimate organizations who cause the biggest damage. These bad actors may pretend to solicit donations on behalf of reputable nonprofits or pose as someone in need of help to pay for food, medicine, and other expenses.

In some cases, they could be after identifiable data, too, like your credit card details and contact information.

But how would these scammers approach you? Mostly in person (as in when a fundraiser comes knocking on your door or stops you on the street). They could reach you via phone, email, and social media as well. Unsolicited outreach is nothing unusual in charitable fundraising.

However, certain characteristics are common across most types of charity fraud. Be particularly wary of:

• Urgent Requests for Money

Fraudsters are well known for high-pressure tactics that prevent donors from thinking things through. So, act with caution if a charity representative appears to be in a hurry.

• Vague Information About the Charitable Cause

Most charity scammers prefer to keep things vague. The less information they give out, the less chance of getting caught. Genuine charities, on the other hand, are transparent about their activities and will be happy to share more details with potential donors.

• Unusual Payment Options

Is a fundraiser or charitable organization asking for a donation via wire transfers, gift cards, or cash? If so, be suspicious. These are all untraceable: Once you part with your money, there will be limited means to track it down.

• Celebrity Endorsements

AI and deepfake technology have come a long way. Scammers use them, too, to impersonate popular figures and get fake endorsements. These can look incredibly convincing and can act as bait to attract donations.

Protecting Yourself Against Shady Charities

The good news is, there are ways to identify and evade deceptive individuals who pose as charities soliciting funds.

Here’s what you should do the next time a fundraiser approaches you.

Research the Charity

Scammers often pick monikers that resemble legitimate nonprofits’. So, don’t just assume that you already know the organization. Note down the charity’s exact name and learn more about it.

Go through its website and social media profiles, read donor reviews, and verify the registration details. You can also vet it on platforms like Charity Navigator and Charity Watch. 

Authenticate Unsolicited Phone Calls and Emails

If a charity reaches out to you via phone, run a quick reverse search using the calling number and check who it’s associated with. You can do the same with an email or mailing address. Installing a caller ID app will also help, especially with identifying numbers flagged for scams.

And if the representative is linked to a well-known nonprofit, call it directly on its official hotline and confirm the donation request.

Ask Questions

Donors who demand more information are scammers’ worst nightmare. So, you can usually detect and deter shady actors by probing for details.

For example, ask about the charity’s registration info, mission, programs, and affiliations. Check in what way your donation will be used and how they measure impact. If the organization you’re dealing with is authentic, it will be more than happy to answer your questions.

Watch Out for Red Flags

Are there typos in emails or printed materials you received from a fundraiser? Does their website look tacky or unprofessional? Does the charity’s name appear strikingly similar to an established nonprofit, but with a few minor differences? Is it pursuing you aggressively for a donation, using high-pressure tactics?

If you answer yes to any of the questions above, you’re likely dealing with a fake charity.

Stick to Secure Payment Methods

We all know that fraudsters prefer wire transfers, cash, virtual currency, prepaid cards, gift cards, and similar untraceable options. On the contrary, many charities that are authentic allow more secure methods to make your payments safer.

Checks and credit cards are always recommended for donations. But review the nonprofit details first to ensure the account provided belongs to the respective charity and not to anyone else.

Donate Through Official Channels

While solicitation in person, over the phone, and via email is widely prevalent, there’s a lot of risk associated with transacting with unknown individuals in such instances.

If you want to make a contribution to a specific cause, it’s best to visit the charity’s official website and check what options are available to donate. Many will have secure payment pages with https prefixes. You can use these or donate through a trusted platform like Charity Navigator.

Prioritize Cyber Security

Poor security hygiene often increases your exposure to scams. If you want to minimize threats, you must pay attention to online security.

For example, avoid unsecured sites and verify website URLs to avoid spoofed and malicious platforms that download malware or steal sensitive data. Also, keep your accounts, files, and devices password-protected and think twice before disclosing private information.

To Recap

Today, charity scams are rampant, and not just potential donors stand to lose out by falling victim.

Every time you contribute to a fake solicitation scheme, legitimate charities are deprived of the chance to raise funds for a genuine cause. And worse, the opportunity to get help is taken away from someone out there who could have benefited from your donation. 

This is why evading dubious charities is incredibly important.

The next time you get a call or visit from a fundraiser, don’t feel pressured to make an instant donation. Follow this guide to protect yourself.

Besides, charitable giving isn’t only about giving away money. You can help someone by buying them food, donating clothes, or rebuilding their house. So, consider all the possibilities and determine how best you can make an impact without getting duped.

FAQ

What are the telltale signs of a fake charity?

Pressure to donate, unsafe payment options, and a reluctance to give out more information usually signal a shady solicitation program.

Lack of details online, tacky websites, typos in emails and other communications, and signs of impersonation are other red flags to watch. Some of these schemes may even bank on fake celebrity endorsements using deepfake technology.

During what times are charity scams most prevalent?

Natural disasters and holidays like Thanksgiving and Christmas typically trigger a wave of charity scams in America. The tax return filing season, when taxpayers try to make use of donation-related tax benefits, is also known for higher scam activities. 

But then again, a charity scammer can approach you at any time of the year. So, practicing caution is crucial whenever you’re dealing with unsolicited outreach campaigns.

How can I confirm whether a charity is legit?

Charities are required to register at federal and state levels. To receive tax-exempt status, they must register as a 501(c)(3) organization, which you can check using the Tax Exempt Organization Search tool of the IRS. You may also contact the relevant state agency to find out about a nonprofit’s registration details.

Charity watchdogs like Charity Watch can be useful resources for more information.

How do I report charity scams?

Anyone who comes across a fake charity can contact the local police and forward a complaint to the Federal Trade Commission on reportfraud.ftc.gov. If the incident is internet-related, letting the FBI’s Internet Crime Complaint Center (IC3) know about the scam is important.

Don’t forget to talk about it on your Facebook groups and similar online forums. This could help create better awareness and encourage other victims to speak up about their experiences.

What percentage of my contributions goes to the actual charity?

The exact percentage depends on the charity. This is mostly because of the varied operating expenses, such as staff salaries, utility costs, office rent, website maintenance fees, and fundraising campaign costs.

Some nonprofits may allocate as much as 70% or more of the donations they receive toward a charitable cause. But with others, this figure can be much lower. You can usually get an idea about the utilization percentage by checking with the respective nonprofit or a charity watchdog.

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