Is this charity legitimate? What will happen with my donation? Will the people who need the help actually receive some benefit?
It is a question facing anyone who wants to donate money to a worthy cause. Unfortunately, a stream of fake charities continuously pop up in the wake of national and international disasters to take advantage of good-hearted people who want to help. Reports of mismanaged charities and outright charity fraud often make the news and leave many people with doubts about which charities are legitimate and which ones are run only to help the scammers behind them.
“One who is faithful in a very little is also faithful in much, and one who is dishonest in a very little is also dishonest in much." Luke 16:10 ESV
Is the solution to stop giving?
No. It's not wrong to ask how to know if a charity is legitimate or not. Don't let that prevent you from giving to important causes. It is possible to vet a charitable organization without investing too much time.
Here's five things you can do to lower the risk of charity fraud next time you want to give back.
1. Utilize Charity Watchdog Groups
Before donating to any new charity, check the organization out at a charity watchdog website. These watchdogs can help you to separate official charities from potential scams. There are several watchdog groups online, and each one uses different criteria to rate charities. Watchdog groups do not cover every real charity in the U.S., so you may want to search on a couple of sites before making up your mind. Four of the most well-known and trusted charity watchdogs are:
2. Always Donate via the Charity's Official Website
It is not unusual for a person to approach you on the street to solicit a donation for a well-known charity. Often the person is wearing a shirt from the organization and may even be distributing literature with the charity's name on it. However, that doesn't necessarily mean you are not dealing with a scammer.
In this situation, it is best to avoid giving directly and instead ask for the website of the charity so you can contribute online later. If the person is reluctant to provide the information or pressures you to donate immediately, it could be a scam.
Also, never follow a link from a social media post to donate. Many scammers create links to spoof website which resemble the real charity's site to fool people into contributing. It's also important to avoid clicking any links in email that ask you to donate.
3. Confirm They're Doing What They Say They're Going to Do
Many worthwhile local charities won't appear on any watchdog safe lists because they are just too small to monitor. That doesn't automatically mean they are not real charities or that you should not support them. However, before giving money to any local charity which is not on a watchdog safe list, do yourself a favor and double check with the people the charity claims to be helping. Besides making sure the charity is legitimate, you may discover that bypassing the charity and donating directly to the local organization is the better option.
4. Verify the Charity's Nonprofit Status
Donating money to a worthy cause is a great way to assist other people in need, but it can also help reduce your tax bill. When you contribute to a nonprofit charity which is a registered as a 501(c)(3) tax-exempt organization, you can write off your contribution in some circumstances. However, be careful. Some scammers will tell you that donations to their organization are tax deductible even when they are not, resulting in a situation which may cause trouble when you try to take deductions on your taxes. You can find out more about which types of donations are tax deductible by contacting the IRS directly.
To verify the 501(c)(3) status of any charity in the US, use the Tax Exempt Organization Search tool on the IRS website. Your state may be able to help with validation of local charities. Check here for how to find the regulator for your state.
5. Do a Quick Search
This might seem obvious, but take a moment to put the charity's name into a search engine. If you start to see complaints or negative news, investigate further. There are legitimate charities that have some negative news unfairly, so that by itself is not a reason to disqualify your donation. That being said, there's enough worthy causes out there that you can choose where your dollars go without extra baggage.
A word on political groups
There's a seemingly unlimited number of political groups that want your money out there. It's your own choice about contributing to those, but do watch out for some of the language these organizations (of all political stripes) use to solicit money. You may agree with the organization about a worthy cause, but that alone does not make the organization a charity. Don't let the soliciting organization conflate what they deem a worthy cause with what a non-profit does.
With a little additional effort, you can prevent scammers from profiting by exploiting your goodwill.
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