How do you make sure that your donation ends up benefiting those for whom your gift was intended?
The Federal Trade Commission recently charged four cancer charities with swindling donors out of $187 million. The FTC announced that the Cancer Fund of America, Cancer Support Services, Children's Cancer Fund of America and The Breast Cancer Society allegedly used most of the funds raised to support cancer patients to instead benefit the charities' organizers and family members and friends. These donations were allegedly used for buying cars, cruises, concert tickets, and other things that didn't help patients.
Consider the following tips.
Hang up on telemarketers. The charities charged with fraud by the FTC used telemarketing calls, direct mail, and websites to ask for donations. A call from someone soliciting a donation puts you on the spot. You might feel pressured to make a donation, but don't rush to say yes. Decline any requests to give over the phone. Telemarketing companies that are enlisted to solicit donations on behalf of charitable organizations usually retain a significant portion of the funds that they raise. Eliminate the middleman and contact the charity directly to make a donation.
Don't wait for charities to come to you. Eliminate the pressure to give to an organization that contacts you and decide which causes are important to you. Identify charities that are addressing those causes. Create a giving plan to avoid making spur-of-the-moment donations.
Do you research prior to giving. Just because an organization says it's doing good works doesn't mean it actually is. You should find out what you can about how an organization will use your money before you make a donation by checking third-party evaluations and ratings sites like the Better Business Bureau's Wise Giving Alliance, Charity Navigator, and Charity Watch. These sites look at charities' finances, governance, and effectiveness. Be concerned if an organization is spending more than 25% on overhead.
Don't send cash. Ever! The FTC advises you to make your donations by check or credit card for security and tax purposes. Also, request a receipt that indicates the donation amount and states that it is tax-deductible.
Reference: Kiplinger's (June 2016) "How to Check Out a Charity Before You Donate"