Consumer Protection Law

How to Make Sure Your Money Goes to a Legitimate Charity

When times are tough, Americans' spirit of giving kicks into high gear. However, it is during these times that we also hear about dishonest people starting fake charities solely to shovel money into their pockets.

While in some cases there may be legal options for reclaiming money given to a fake charity, it is critical to investigate any charity to which you are thinking about donating.

Ask Questions

If you get an unsolicited phone call asking for a charitable donation, then the first thing you should do is start asking questions. If you like the pitch, you should request that the caller send you written information. A legitimate charity will be able to send you information about its mission and its work. The caller should also be able to answer questions about how the charity spends its money.

Be aware that many illegitimate charities have names that are very similar to legitimate and respected charities. This is designed to confuse you and to encourage you to send money without asking a lot of questions.

Just like a phone call, you should be suspicious if the request for donations comes by e-mail. This is especially true after a major disaster or emergency. While some legitimate charities solicit money after a disaster, remember that a legitimate charity will gladly accept money from you in the weeks to come and should not be putting immediate pressure on you to contribute right away.

Research the Charity

State attorneys general have charitable divisions that maintain information about both legitimate and fraudulent charities.

The Better Business Bureau (BBB) also has similar information to government offices and can answer questions over the phone or via their website. The Philanthropic Advisory Service Reports are maintained by the BBB's Wise Giving Alliance and have information on charities, including a description of their programs, finances, and fundraising methods.

The American Institutes of Philanthropy (AIP) rates more than 400 different charities in the United States. Its ratings take into account the amount of money that reaches people or causes in need.

The GuideStar National Database of U.S. Charities has basic information about more than 600,000 legitimate U.S. nonprofit organizations.

Tax Deductions for Donations

In order for you to take the tax deduction for your donation on your federal tax return, the charity needs to be legitimate. Also, it is a good idea to pay by check so that you have a record of the transaction for your file. Further, a check prevents cash from being diverted from the stated charitable purpose and your credit card number from being used for unauthorized purposes.

Reporting a Fake

If you get a request for a donation from a fraudulent charity, you should report it. That will help make it easier for law enforcement to put a stop to bad actors and prevent any other people from giving money.

Complaints regarding possible fraudulent charities should be filed with your state's attorney general's office.