How to Measure Charity Fraud

Giving to charities is an easy way to help your neighbor, but you need to know that the charity you give to is trustworthy. Of course, it must be a charity to begin with or you will not be eligible for an IRS deduction for your contribution. Charity frauds often follow disasters, so take measure of the charity before you give.

Instructions

1. Research the charity to make sure it is legitimate. Fake charities may use names that sound very close to those of legitimate ones. Often, this step is as easy as doing a quick search of the IRS website (see Resources below). Charities must list themselves with the IRS to be deductible on your tax return. Use seniority as your guide to donate to charities that have proven themselves over time.

2. Ask for the percent of funds received that go to charitable activities. Legitimate charities spend no more than 10 percent of the money they take in, using 90 percent or more for charitable activities. The BBB Wise Giving Alliance collects IRS 290 forms from charities and reports the administrative and marketing costs of charities.

3. Give checks rather than cash or credit cards when making a charitable donation. Refuse to do business with those who pressure you or provide no documentation. The amount of information the person provides is a good indication of the trustworthiness of the charity.

Tips & Warnings

• Be especially wary of donation requests by email or telephone because legitimate charities do not use these methods with new donors.

Resources

• Read the FTC notice to consumers on avoiding charity fraud.
• BBB Wise Giving Alliance
• Search the IRS database of charitable organizations.