How to Avoid Donation Scams

Although it's better to give than to receive, you don't want to be taken for a ride either. Before you donate money to the cute kid or polished executive soliciting you, wise up, ask questions and do your homework. Unfortunately, disreputable charities exist and instead of supporting a worthy cause, you might fund administrative costs or line the bank account of a scam artist.

Difficulty: Moderately Easy

Instructions

1. Learn the common warning signs of a donation scam. The Federal Trade Commission (FTC) states that fraud indicators include email-only solicitations, high pressure tactics and charities with names similar to those of more popular ones. Additional scam signals are organizations that ask for your bank account information right off the bat and only accept cash donations.

2. Ask questions about the organization's mission, make-up, tax-exempt status, yearly financial statement and other pertinent information. In particular, ask what percentage of your gift will go directly to the cause. If the solicitor won't give you these facts or at least point you in the right direction, it's probably a scam, according to the FTC.

3. Delay giving money until you've researched the charity more in-depth. Check the organization against the Better Business Bureau Wise Giving Alliance, American Institute of Philanthropy or other reputable consumer watchdog group.

4. Donate only to organizations recommended to you by informed parties or those you've researched personally. While the advertisement or solicitor might pull at your heartstrings, close your purse strings until you're satisfied that your donation is really going to a worthwhile cause.

Tips & Warnings

• Scam artists prey on older people especially around the holidays, so help educate your elderly relatives and friends about signs of donation fraud.
• If you're a victim of a donation scam, file a complaint with the FTC.

Resources

• Find reputable nonprofits at American Institute of Philanthropy
• Visit Charity Watch for more donation tips
• File a donation scam complaint with the Federal Trade Commission