American Bank - Education Center
If you are thinking about giving to a charity, do your research to avoid
fraudsters who try to take advantage of your generosity. Here are
tips to help make sure that your charitable contributions actually go to
the cause you support.
Signs of a Charity Scam
These days, charities and fundraisers (groups that solicit funds on
behalf of organizations) use the phone, face-to-face contact, email, the
internet (including social networking sites), and mobile devices to
solicit and obtain donations. Naturally, scammers use these same methods
to take advantage of your goodwill.
Regardless of how they reach you, avoid any charity or fundraiser that:
Refuses to provide detailed
information about its identity, mission, costs, and how the donation
will be used.
Will not provide proof that a
contribution is tax deductible.
Uses a name that closely resembles
that of a better-known, reputable organization.
Thanks you for a pledge you do not
Uses high-pressure tactics like trying
to get you to donate immediately, without giving you time to think
about it and do your research.
Asks for donations in cash or asks you
to wire money.
Offers to send a courier or overnight
delivery service to collect the donation immediately.
Guarantees sweepstakes winnings in
exchange for a contribution. By law, you never have to give a
donation to be eligible to win a sweepstakes.
Take the following precautions to make sure your donation benefits the
people and organizations you want to help.
Ask for detailed information about the
charity, including name, address, and telephone number.
Get the exact name of the organization
and do some research. Searching the name of the organization online
— especially with the word “complaint(s)” or “scam”— is one way to
learn about its reputation.
Call the charity. Find out if the
organization is aware of the solicitation and has authorized the use
of its name. The organization’s development staff should be able to
Find out if the charity or fundraiser
must be registered in your state by contacting the National
Association of State Charity Officials.
Check if the charity is trustworthy by
contacting the Better Business Bureau’s (BBB) Wise Giving Alliance,
Charity Navigator, Charity Watch, or GuideStar.
Ask if the caller is a paid
fundraiser. If so, ask:
The name of the charity they
The percentage of your donation
that will go to the charity
How much will go to the actual
cause to which you’re donating
How much will go to the fundraiser
Keep a record of your donations.
Make an annual donation plan. That
way, you can decide which causes to support and which reputable
charities should receive your donations.
Visit this Internal Revenue Service
(IRS) webpage to find out which organizations are eligible to
receive tax deductible contributions.
Know the difference between “tax
exempt” and “tax deductible.” Tax exempt means the organization
doesn’t have to pay taxes. Tax deductible means you can deduct your
contribution on your federal income tax return.
Never send cash donations. For
security and tax purposes, it’s best to pay by check — made payable
to the charity — or by credit card.
Never wire money to someone claiming
to be a charity. Scammers often request donations to be wired
because wiring money is like sending cash: once you send it, you
can’t get it back.
Do not provide your credit or check
card number, bank account number or any personal information until
you have thoroughly researched the charity.
Be wary of charities that spring up
too suddenly in response to current events and natural disasters.
Even if they are legitimate, they probably don’t have the
infrastructure to get the donations to the affected area or people.
If a donation request comes from a
group claiming to help your local community (for example, local
police or firefighters), ask the local agency if they have heard of
the group and are getting financial support.
What about texting? If you text to
donate, the charge will show up on your mobile phone bill. If you've
asked your mobile phone provider to block premium text messages —
texts that cost extra — then you won't be able to donate this way.
Charities and the Do Not Call Registry
The National Do Not Call Registry gives you a way to reduce
telemarketing calls, but it exempts charities and political groups.
However, if a fundraiser is calling on behalf of a charity, you may ask
not to get any more calls from, or on behalf of, that specific charity.
If those calls continue, the fundraiser may be subject to a fine.
Report Charity Scams
If you think you’ve been the victim of a charity scam or if a fundraiser
has violated Do Not Call rules, file a complaint with the Federal Trade
Commission. Your complaints can help detect patterns of wrong-doing and
lead to investigations and prosecutions.
This site is for educational purposes
and is not intended to provide legal advice. For specific advice
about your unique circumstances, you may wish to consult a qualified
professional. Credits: Federal Trade Commission; Federal Bureau of
Investigation; Homeland Security; National Cyber Security Alliance.