Checking Out Charities
By Deborah Jeanne Sergeant
Don’t get scammed, donate to legitimate charities
Whether you call it good luck, fortune, blessings or karma, sharing what you have with a charitable organization is a good thing to do. But knowing how your gift will be used represents an essential part of donating.
Make sure the organization is legitimate, whether you are donating online, in-person or by check.
One way to do this is to give through an existing, well-known group like Rochester Area Community Foundation (RACF) or United Way. These organizations vet the groups to which they disburse funds so you can feel secure that your money will go to someone that will use it for the cause they claim.
“Most of the people we work with establish a fund that they can draw on to make gifts to other charities,” said Jennifer Leonard, president and CEO of RACF. “We also have field of interest funds that support organizations of a certain kind, like youth, health or racial justice. In that case, we make the selection.”
Another type of fund designates all the giver’s favorite annual charities from an interest-earning endowment, starting at $10,000.
Giving through an organization like RACF streamlines the donation process and makes recordkeeping much simpler. An endowment fund can be included in the donor’s estate to create a legacy of support to important causes that continues forever.
RACF gives grants to more than 800 local charities among eight counties in Western New York and the Finger Lakes, along with special gifts to acute needs elsewhere.
Fraudsters like to masquerade as legitimate concerns and have become very good at doing so. Spoofing technology allows them to appear to call from the same phone number as a trusted charity. It’s easy to copy a charity’s letterhead for a postal solicitation. Many scammers try to fool unsuspecting people with an email using the same logo and links that direct people to a webpage mimicking the real one.
The safest way to donate is to give directly to the organizations you know—and not through a link posted on social media or sent to you in an email (most real charities will not email an initial request, although some follow up with an email to previous contributors).
Never give your financial information over the phone. Door-to-door or email solicitors can claim whatever they want. If you give to the organization directly, that is safer. Some scammers insist they receive donations in cash (a bad idea) or in checks made out to them. Checks should be written out to the organization, not one person.
If you are looking for a new organization, start with a cause dear to you. Leonard advises asking a trusted friend who is familiar with the organization and looking at their board listed on the website.
“The state of New York requires a minimum number for the board of a nonprofit,” Leonard said. “The idea of a board is to provide to confirm the mission and see it through. The board is in charge. The board has to care about the organization and articulate what it does.”
She added that six to 10 board members is typical for a small organization and 15 to 25 is for a larger one.
You should recognize some board members as area businesspeople and contact them from their business’ phone number to ask about the organization.
“You can also look for evidence that there’s a plan,” Leonard said. “A nonprofit that is successful looks for how it’s going to help meet its mission and sets an operational strategy to get there. They need a theory of change.”
If possible, volunteer with them to get to know their mission and needs. While financial gifts are always welcomed, you may have a possession that could also benefit their cause.
You should also check the Better Business Bureau’s Wise Giving Alliance (www.give.org), Charity Star, (www.charitynavigator.org), for information on larger charities.
“A charity has to be registered with the IRS as a type of entity and file tax returns,” said Diana Apostolova, investment consultant with Rochester Investments. “Big charities will have their tax returns available on their website as well as financial statements that people may want to look at prior to making donations.”
The charities with 501(c)(3) designation have been approved for tax-exempt status and are legitimate in the eyes of the IRS.
Search for the organization by its Employer Identification Number (EIN) at https://apps.irs.gov/app/eos or call 877-829-5500.
Apostolova encourages potential donors to ask for the organization’s financial statements. Without those, “it’s going to be impossible to determine what is spent on administrative costs and what goes to support their mission.”
CharityNavigator estimates that most organizations use about 75% of their budget for their cause with the remaining 25% supporting administration (15%) and fundraising costs (10%). While this varies by organization, percentages wildly different should raise concern.
You should also have the contact information for the organization, including a physical address. Search online for complaints against the organization.
How to Denounce a Fraudulent Group
If you believe you have been scammed, contact the Department of State at www.dos.ny.gov or 1-800-697-1220; the Federal Trade Commission at www.ftc.gov or 1-877-FTC-HELP; the New York State Attorney General at 1-800-771-7755 or www.charitiesnys.com.