Tips for Avoiding Charity Scams

It’s the time of year when you might be getting lots of requests for donations. While you want to be as generous as possible, it’s also necessary to be wise with your resources and have a way for deciding who you will give to, and who you won’t.

Giving to local organizations offers a way to give back to your community and perpetuate goodwill towards your business. Here are some tips for giving responsibly. Here are some tips to ensure you avoid charity scams and make sure the charity you choose uses your donation as intended.

• Ask your customers about it. If an organization you’ve never heard of solicits a donation, you want to get to know as much as you can about it before you start handing over money. A good place to start is with your customers. If it’s an organization they know and endorse, that’s a good start. If you end up supporting that organization, then you’re helping an organization your customers care about.
• Ask for detailed information. Get the exact name of the organization, including the address, telephone number, website and EIN (the federal Employee Identification Number). Any charity you give to should be a registered 501(c)3 organization. You can use their EIN to do a Tax Exempt Organization Search for them on the IRS website. If they do not appear on that list, don’t make a donation. You will likely not be able to deduct your gift from your taxes if that organization is not a tax-exempt organization.
• Use a third-party charity checker. In addition to looking the charity up on the IRS website, you can also use one of several third-party services, including Charity Navigator, Charity Watch, GuideStar or the Better Business Bureau’s Wise Giving Alliance. These services can help you determine the trustworthiness of the charity in question. They can also offer helpful articles and advice for making donations.
• Ask for a mission statement. Anyone calling to solicit donations should be able to state the mission of the organization they represent. If a mission statement is not readily available, it might be reason to back away. Not only might that be a sign of an illegitimate organization, but you also want to have a clear understanding of why you are giving to a particular organization and what their goals are.
• Take your time. Be wary of responding to requests that are immediate. An organization using high-pressure tactics to get a donation immediately may be trying to divert your attention from doing your research. There are some cases, such as in a natural disaster, where acting quickly is critical. So you are prepared to help in such an instance, act now to establish relationships with local relief organizations that you trust, so when the need arises, you already have a trusted place where you can send your donation.
• Never send cash. Always pay by check or with a company credit card. This gives you a record of your donation for tax purposes. Don’t send cash or wire money. Never provide credit card or bank account information until you have thoroughly researched the organization.

For more information on making the most of your donations, see this article from the Hardware Retailing archives, Five Ways to Do More With Your Community Donations.