Identifying Charity Fraud: How to Spot Problems Before You Write a Check

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Identifying Charity Fraud: How to Spot Problems Before You Write a Check

Giving to a charity that you trust and admire is one of the best ways to spend your money. However, imagine that situation in reversal: you find out that the charitable organizations that you have been donating to have been doing some not so honorable things with your money. It is called charity fraud, and it is ugly business because it makes us doubt those who are truly trying to do good in the world.

How to avoid this problem in the first place? The good news is that there are many things you can do to spot problems before you write a check. Here are some tips that can help you avoid charity fraud before you write a check.

Look for a charitable organization or non-profit that is approved by the Internal Revenue Service. This is relatively easy to check on the World Wide Web. The web has made it easier than ever to check the status and reputation of a charitable organization or non-profit. Before you write out that check, be sure that your potential charitable organization or non-profit has tax-exempt status with the IRS. Where can you find this type of information? Tax exempt charitable organizations are identified by the IRS in the IRS publication 78. The IRS publication 78 is constantly being revised, and it is available for viewing online.

Do ample web research before writing out a check. Do not just send a check to the first charity that catches your eye. Although most charitable organizations you will come across are probably legitimate, just a few minutes of easy web research can help you sort through the growing list of charitable organizations and non-profits to find an organization that is truly worthy of donations. This is perhaps the best thing you can do to avoid falling for charity fraud. There are many fine web sites that will compare legitimate web sites and tell you which ones have the best reputations.

Check with your local government agencies to identify known charity frauds. If you are thinking of writing a check to a local charity or perhaps a local chapter of a charity, you may want to contact your local government agencies before you write off a check. Local government agencies such as your state’s attorney general office can provide you with information about charities that have been identified as participating in fraud, or who have complaints lodged against them and are in the process of being investigated. Also, your local government agency may be able to alert you as to information regarding local charity fraud trends, and what kind of charity fraud has been identified in your area, if any.

Check out the Charity’s Form 990. Does the charitable organization you are considering have a Form 990? Always ask for this form if you are not sure where your money will be going. All charitable organizations and non-profit groups that raise over $25,00 are required to file a tax return that is known as Form 990. Form 990 can be an excellent resource for finding information about your potential charity. If your potential charitable organization has never filed a Form 990, this should raise a red flag, especially if they claim to raise more than $25,000 each year.

Always avoid giving to charitable organizations that ask for money over the phone. Phone solicitations are the most prevalent way that charities commit fraud. Most legitimate charitable organizations will no longer solicit for donations over the phone. This is due mostly to the amount of charity fraud that takes place over this medium. Only give to charitable organizations that provide full documentation that you can peruse at your leisure. Never give to an organization that pressures you for donations.