As Evelyn Young was leaving the Kmart in Bloomington, Ill., this past summer, a young boy crossed the parking lot toward her, a rolled-up paper clutched in his hand. He came close, unrolling the paper as a form of identification, and asked Young if she would support the local Boys & Girls Club. Young, who unfortunately for him is the executive director of the Boys & Girls Club of Bloomington-Normal, knew the club never sends kids out to ask people for money and was horrified to encounter someone "doing illicit kinds of solicitations in our name." She reported the incident to the police.
Generosity is alive and well in the United States, even with the economy ailing. Charitable giving, though down 3.6 percent from 2008, surpassed $300 billion in 2009, according to the annual philanthropy report put out by the Giving USA Foundation, a research and education group, and the Center on Philanthropy at Indiana University. Three fourths of those donations came out of individuals' pockets. Ken Berger, CEO of Charity Navigator, an online site that rates charities to inform potential donors, estimates that together Americans give two to three times more than people in any other country.
But it can obviously be risky to simply say "yes" and open your wallet. How can donors be sure their hard-earned dollars make a tangible difference rather than lining the pockets of impostors or real charities that misuse funds? Experts agree that taking a little time for research is vital in order to avoid scams and to support effective organizations. "Use your heart, by all means," Berger advises. "But use your head as well."
The danger of being scammed is on the rise as the holidays approach, says the FBI, and it's always higher directly following a disaster like the earthquake last January in Haiti. As of early September, the bureau had received nearly 450 complaints about potentially fraudulent charities claiming to provide relief there. "When big money is involved, you're going to have scoundrels that come out of the woodwork," Berger says.
Many will be using high-tech tactics. Phishing, though an increasingly well-known trick, still ensnares the unsuspecting or distracted, who click on E-mail links leading to false Web sites that ask for donations. The bogus sites are designed to seem real, but credit card data and passwords are captured by the scammers for their own gain. Victims who do not monitor their bills and credit scores may not know they've been scammed for quite some time.
The best way to avoid phishing is to type a charity's Web address directly into your browser. If you need to find a group by searching, note that most nonprofit Web sites contain the organization's name followed by ".org." Consumer and charity watchdog Web sites like the Better Business Bureau, Charity Navigator, and GuideStar also list nonprofits' official Web addresses, and may include the tax forms and financial disclosures required for a nonprofit to retain tax-exempt status. Charity Navigator rates nonprofits based on their financial viability and efficiency (how much of every dollar goes to run programs and how much toward administrative and fundraising costs), and the Better Business Bureau rates them based on 20 standards of accountability, including the structure of the board of directors and the transparency of financial data. Any charity that meets all 20 standards is classified as a BBB Accredited Charity.
A quick search on sites like these is a great way to find out if an organization actually exists and to avoid giving to sound-alike charities. In 2005, Kent Ray Stryker of suburban Los Angeles was sentenced to 51 months in prison after he created more than a thousand 800 numbers and "doing business as" names, which allowed him to cash and deposit checks made out to "National Cancer Society" or "National Arthritis Association," plays on the established American Cancer Society and National Arthritis Foundation.
Not all charities with similar names are scams, but neither are all created equal. If you want to give to the Children's Defense Fund, a child advocacy organization with a four-out-of-four-star rating on Charity Navigator, be sure you aren't giving to the Children's Charity Fund, which educates the public about handicapped and disabled children's needs but has a zero-star rating due to fundraising costs that run an exceptionally high 87.2 percent of total spending. Charity Navigator calls nonprofits with a zero rating "exceptionally poor performers," says CEO Berger. "I would also call them 'run in fear.' "