More Greedy Than Needy, How to Spot Charity Scams, Especially During the Christmas Season: Internet ScamBusters #261
Wishes for peace on earth and good will towards men will prompt many of our kind-hearted subscribers to give something back this holiday season. But clever charity scams can rob the needy of all your good intentions.
Today we'll help you recognize the warning signs of four charity scams and also share what savvy charity donors do to make sure their money ends up in the hands of those who need it most.
Let's get started...
Four Charity Scams to Avoid
With the holiday giving revving up, you may be thinking of donating to a local charity, or perhaps you've already been solicited by a worthy sounding cause.
If so, you're not alone. Studies show half of charity donations are made between Thanksgiving and New Year's Eve.
But when a charity you've never heard of lures you with an emotional plea or proposes an unlikely sounding scheme, it's time to start asking questions.
Real charities will spend 60 to 99 percent of the money they collect on the people they are supposed to serve. By contrast, charity scams often wind up spending most or all of the money on its "administrators."
Here are four charity fundraising drives you may have wondered about.
1. The Donate A Car Deal
Donating a car to charity sounds like a win-win proposition. The donor has a hassle-free way to get rid of an old car and gets a tax deduction for doing it. The charity gets an asset it would not have had otherwise.
The problem is often very little of the car's value goes to charity. For-profit businesses handling the cars on behalf of the charities pay costs to tow, condition cars and advertise. They then sell them at wholesale auctions, leaving very little for the charity.
Even worse, some sleazy middlemen purposely disable cars so they can be sold more cheaply, then re-sold for a profit after they are "fixed."
Action: The best way to donate a vehicle is to identify a charity that actually uses vehicles in its programs, for example, delivering meals to the homebound, taking elderly or blind people to the doctor or on errands, or training future auto mechanics.
You can contact the United Way, Goodwill, Salvation Army, community college or vocational school to locate a program that actually uses cars.
2. The Email Charity Scam
Unless you have signed up to receive email from a charity, do not respond to email charity solicitations. Real charities do not normally recruit new donors by email, and especially not by spaham (misspelled intentionally).
Email charity scams may use legitimate sounding names and link to a website where you can make a donation. These tend to be fake websites made to look like an organization's official site.
Be wary of websites that ask for personal information like your Social Security number, date of birth or bank account information, which can lead to identity theft.
Action: If you want to help the charity mentioned in the email, contact them directly with a phone call or use a Google search to find their real website.
More and more charities are accepting donations made on their official websites, so it's not wrong to make a donation this way. Just don't use an unsolicited email to get there.
3. Police and Firefighter Charities
Police and firefighters put their lives on the line for us every day. So, some well-deserved backup often seems like the right thing to do.
But where is your donation to that police charity really going? Just because police leagues, sheriff's associations or firefighters' relief organizations have the words "police" or "firefighter" in their name doesn't mean your local officers will be the ones who benefit.
Action: Before you give, make sure you know whether the group is a local, state or national organization. Get specifics on the programs your donation will fund and make sure you understand how they will help your local officers.
Ask how much of your money goes towards the officer program. If the donation is used to purchase an ad in the charity's journal or to buy circus tickets, most of it may well get eaten up in production costs.
One useful resource (not only for checking out police and firefighting charities) is CharityNavigator.org.
They have a Top 10 list of the 10 charities that most overpay their for-profit fundraisers. Five of the top 10 charities on this list have the words "police" and "firefighters" in their name! These charities spend 85% to 95% of their donations on expenses and fundraising fees, leaving only 5% to 15% to be used for their stated purposes.
Our advice is simply to be cautious here. Unfortunately, there are a lot of scam organizations that may sound legitimate, but do little or nothing to contribute to the police and firefighters that donors believe they are helping. Make sure your donation is actually making the contribution you want.
4. Prospect Fundraising
Many people first learn of a charity through a telemarketer call. (Charities are not bound by the Do-Not-Call list.) These calls are typically made by for-profit fundraisers hired on behalf of the charity.
Though many charities raise money this way, these for-profit companies may keep anywhere from 25 to 95 cents of every dollar they collect. Charities raising money this way count on repeat donors to offset the first year's fundraising expense.
Action: Don't give as a knee jerk reaction. Instead, research any charity you are considering. Make sure they spend most of the donated funds on their programs and keep advertising and administrative costs below 25 percent.
A well-run charity welcomes questions. For more advice on how to know if a charity is legitimate, you can read our Which Charities are Legitimate? article.
Finally, you can find 10 more tips to avoid charity scams in our Charity Scams article.
Time to conclude for today -- have a great week!