How to Outsmart the Big Bad Charity Wolf

Legitimate charities lose up to 5% of their revenue each year to fraud. Here’s how to ensure your donations make it into the right hands and hearts.

Story by John Martin

 

If the heart of Texas is as deep as they say, the hearts of Texans are even deeper. In fact, according to WalletHub, Texas is currently the 16th-most charitable U.S. state.

Donating time and resources to people in need is a perfect display of the beautiful side of humanity. Unfortunately, where there is beauty, there are often wolves in sheep’s clothing, waiting to prey on the kindness of others for their own gain. The IRS estimates that legitimate charities lose up to 5% of their revenue each year to fraud.

Don’t let this news deter you from donating to good causes. Following these seven tips can help you outsmart the big bad charity wolf and ensure your money goes to the right place:

Research the Charity

Before donating to a charity, take the time to research the charity thoroughly. Start by looking up their official website (do not click links in emails or text messages) to learn more about the charity’s mission, programs and financial transparency. Look for signs of legitimacy, such as a registered 501(c)(3) status.

Verify the Contact

Be cautious if you receive an unsolicited email, phone call or in-person solicitation. Scammers often use these methods to prey on unsuspecting victims. If in doubt, seek out the charity's official contact information independently and contact them directly to confirm the request.

Be Wary of High-Pressure Tactics

Scammers often use high-pressure tactics to convince you to donate quickly without giving you time to research. Legitimate charities will not rush you into making a decision. Take your time to evaluate the cause.

Check for Red Flags

Look for signs of legitimacy, such as clear information on how the funds will be used, a detailed breakdown of the organization’s financials and a board of directors. Be careful when dealing with organizations that cannot readily provide this information.

Don't Share Personal or Financial Information

Never share sensitive personal or financial information, such as your Social Security Number or credit card details with anyone who claims to represent a charity. Legitimate charities will never ask for such information over the phone or through email.

Use Secure Payment Methods and Keep Receipts

When donating online, use secure payment methods, such as credit cards or PayPal, rather than wire transfers or cash. Secure methods offer protection against fraudulent transactions. Additionally, you should keep records of your donations and verify them on your bank or credit card statements. This will help you identify any unauthorized or fraudulent charges.

Report Suspicious Activity

If you suspect you’ve fallen victim to a charity scam, you can file a report with the Federal Trade Commission at www.ReportFraud.FTC.gov.

If you’ve found it in your heart to donate to a charitable cause, these tips can help you outsmart the big bad wolves so your generosity makes it into the right hands.

Personal Finance