The holidays are traditionally a time for giving. In fact, most charity donations happen between Thanksgiving and New Year’s. But how can you be sure that your money is going where you think it is?
Whenever there is a catastrophic event there will be people that need help. Unfortunately, it seems like wherever there is sorrow, there are scammers. From 9/11 and Hurricane Katrina to the death of pop icon Michael Jackson, someone will find a way to exploit a tragedy to make a buck.
Scams that should be ashamed of themselves
Michael Jackson’s attorney’s are suing two California charities, Heal the World and United Fleet, for pretending they had a relationship with Jackson and trying to fool the public into thinking they are working for his causes. According to Reuters, “The two entities have registered six Jackson-related trademarks, have applied for 41 additional ones and have sold merchandise using those trademarks, the lawsuit stated.”
Before Hurricane Katrina even hit New Orleans scammers were registering websites with the name Katrina in it. Dozens of fake charities such as Katrinafund.com and Neworeleanscharities.com were soliciting donations. Other scammers did a frightening good job of imitating the Red Cross. These emails contained a standard credit card information form, the same graphics, fonts and security logo as used by the real Red Cross. When someone donated they were sent to a third party site for a moment and then taken to the legitimate Red Cross.
According to the Internet Storm Center before a disaster even strikes dozens of domains are registered. “Ever since Hurricane Katrina back in 2005 we’ve seen after every significant natural disaster, the scammers start registering domains and try to collect donations.”
Cops & RobbersMost people would think that the police would be immune to rip-off artists. In fact, con artists bank on this assumption. Some of the most common scams are anything using “Police” or “Firefighters” in their name. Anyone who risks his or her life to protect us deserves some help; again, just make sure the money is really going where it’s supposed to go.
So what makes a charity legit?
A real charity should give 60 percent to 90 percent of its profits to the people its helping. In addition to outright fraud, there are other charities which spend most of their money on administrative costs, including high salaries for CEO’s. CharityNavigator.org keeps lists on charities that waste money. Right now they have the American Tract Society spending 68 percent of all money on administrative expenses, the Boys Choir of Harlem spending 66.3 percent, the National Council of Negro Women 64 percent, and the Bay Area Discovery Museum 60.7 percent.
Many charities raise money by tele-fundraising (charities are excluded from the no-call list). Most hire for-profit companies to make the phone calls. These companies can take anywhere from 25 percent to 95 percent of every dollar they collect. So how do charities make money off this? They hope you continue to give the next year and the year after that. Instead of giving this way, do your research and contact your charity directly so that all of your money goes to help people besides the telemarketers.
Some charities simply divert the dollars—they send the money someplace else without telling you. Kars4Kids (aka Joy for Our Youth) asks you to donate your old, unwanted cars to help needy kids. However, all the money raised by Kars4Kids ($16.2 million in 2007) actually goes to Oorah. According to the Oorah website, Oorah has “the goal of awakening Jewish children and their families to their heritage. We enable children to enroll in Jewish day schools or yeshivos, where they receive a full religious and secular education straight through high school.” Nowhere on the Kars4Kids commercial, website or anything else does it even mention Oorah. In addition, Kars4Kids also offers vacation vouchers which are really invitations to timeshare presentations.
How can you tell who’s naughty or nice?
The BBB’s Wise Giving Alliance offers a list of national charities that fail to meet all 20 of their standards.* They break down how much each charity spends on each expense, such as administrative costs, education, merchandise and more.
Don’t be an idiot
Don’t send money to anyone sending you an unsolicited email. Even if they have a formal, important sounding name and a nice looking website, don’t fall for it.
If you wish to donate money (and everyone than can, should) stick with established charities such as the Red Cross, Food for the Poor, American Cancer Society and more.
Here are a few tips:
- Call them on the phone. If someone calls you, thank them, look up the number yourself, and call them back.
- Don’t give cash. Don’t write checks to cash. Write checks that you can cancel.
- Find out the charities real name and take a few minutes to look them up.
*NOTE: Many of these standards include things like “number of board members.” Just because your favorite charity is on this list does not mean it’s bad or wrong. Read everything carefully and think for yourself.