Tips for Avoiding Fraud

Tips for Avoiding Fraud

Just because someone asks you to support a worthy cause doesn’t mean you can’t take time to consider the nonprofit seeking your donation. Creating greater social impact requires avoiding fraud. Here are some things you can do to avoid charitable fraud: 

Remember the difference between a worthy cause and a worthy charity

There are many good and worthy causes, but that doesn’t mean that every charity addressing that cause is just as good. It’s a distinction that can be hard to remember when you feel strongly about a cause. It’s also why, in a well-known example, one fraudulent cancer charity successfully raised so much money: donors who had friends or family with cancer found it hard to say “no.” They may have avoided the fraudulent charity altogether if donors had done a simple internet search and asked their friends and family touched by cancer: “Which nonprofits have really helped you?”

Verify the nonprofit's legitimacy

If a nonprofit, its staff, or its board has been the subject of negative press or an official investigation, that is a clear red flag to proceed with caution before committing funds. A simple internet search can identify red flags, and may be the only way to check on crowdfunding appeals on sites like GoFundMe or Spotfund. Try a quick internet search for the charity’s name + “scam” or “complaints” to see if there have been any negative complaints or investigations.

It is important to check that an organization is still active and up to date with required filings. In the United States, tax exempt (i.e., nonprofit) status is determined by the Internal Revenue Service (IRS). You can search for nonprofits directly on the IRS website, which regularly updates its website with the latest nonprofit tax returns (i.e., the 990) and maintains a list of organizations whose tax exempt status has been revoked. Additional resources such as CandidCharity Navigator, and BBB Wise Giving Alliance all provide free financial and programmatic information so you can be confident that your chosen charity is legitimate and transparent.

Give securely

Once you’ve verified the legitimacy of the nonprofit, ensure that if you donate online, you do so through an official, secure nonprofit website that uses HTTPS encryption. Avoid links in unsolicited emails or social media posts. Credit cards and checks offer better fraud protection than debit cards or wire transfers.