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In 2021, the Federal Trade Commission (FTC) – with the assistance of 38 states and 46 agencies – stopped a tele-funding operation that attacked 67 million consumers with illegal robocalls for deceptive charitable fundraising calls. The defendants were accused of having deceptively solicited $110 million.

In 2022, The New York Times reported on a scheme where 76 fake charities were created by one individual, including the “American Cancer Society of Michigan.” This was an entity not affiliated with the American Cancer Society, nor located in Michigan, and did not collect donations to fight cancer.

Also, over the years the National Center for Disaster Fraud has reported hundreds of complaints received after major hurricanes. They came from individuals who believed they were donating to families left homeless after such storms, only to discover later that they had been defrauded.

Generally speaking, Americans are a giving people. Substantial dollars are donated to charitable causes each year in the United States. The National Center for Charitable Statistics has estimated that at least 1.5 million charitable organizations exist in the U.S., and the National Philanthropic Trust reported that more than $499 billion was paid out by Americans in 2022 to these charities. But the schemes described above are just a few examples of how Americans’ goodwill and desire to aid people in need can be subverted by fraudsters.

When contemplating making a charitable donation, you should heed the FTC’s warnings:

• No one should be rushed into making a donation.
• Fraudsters may try to trick a person into paying them by sending a thank you note for a donation never made.
• Fraudsters can change their caller ID so it looks like their call originates from a local area code.
• Fake charities are frequently given names that are very similar to real charities.
• Fraudsters will make vague and sentimental claims but not provide any specifics about how a donation will be used.
• Bogus organizations may claim that a donation is tax-deductible when it is not.

The request for charitable contributions can come from multiple sources – phone calls, letters and email being the most common. Before making any commitment or providing any personal information, confirm the legitimacy of the organization. As the FTC has noted, the following can be used to research individual charities:

• BBB Wise Giving Alliance
• Charity Navigator
• Charity Watch
• Candid
• IRS’s Tax-Exempt Organization Search (to confirm if a donation would be tax deductible)

There are other fraud risks connected to making charitable contributions, including making a donation through a crowdfunding campaign. An online fundraising platform or online giving portal is a website that allows a person to donate to one or more charities selected from a list on the site. Recognize that donating through such a platform may result in the money not going directly to the charity chosen. The platform or other intermediary may get the money first and take some of it as a fee.

Further, the timing for getting the money to the charity may also be delayed. Crowdfunding as a medium still requires you the donor to perform due diligence on the legitimacy of the charity as well as the platform, including the following:

• The platform should explain who gets your donation and how your money gets to the charity chosen.
• The website should clearly state if the platform or another intermediary will keep part of the donation as a fee before sending the rest to the chosen charity.
• Online fundraising platforms should say how long it will take for the charity to receive the donation.
• In the rare instance that a donation cannot be sent to the charity chosen, the website should say what happens to it.
• Check if you can choose whether your information is shared with the charity or anyone else.

The actual form of payment for your donation can be another way to reveal fraud risk. Someone asking for a donation in cash, gift card or wiring money is a likely fraudster. Safe practice is to pay by credit card or check. Make a record of all donations and monitor bank or credit card statements to ensure that the amount charged is what you committed to and that there is no recurring donation set up.

If you suspect that you were a victim of a charity scam or have just been targeted by these types of fraudsters, this activity can be reported to ReportFraud.ftc.gov. State charity regulators can be identified through Nasconet.org.

Portions of this article have been drawn from the FTC’s website: Donating Safely and Avoiding Scams | Consumer Advice (ftc.gov) and Donating Through Crowdfunding, Social Media, and Fundraising Platforms | Consumer Advice (ftc.gov)