Creative Consumer: Real Intentions, Fake Charities
Don't be fooled by swindlers looking to prey on your generosity.
Feb. 4, 2008 — -- It's that time of year. Tax forms have started arriving in mailboxes. And that may have you thinking about ways to offset your tax bill.
Donating money is one way to do it. Giving to charity should make you feel good and help a good cause. But beware -- there are fake charities out there. And even real charities may make poor use of your donation dollars.
Experts estimate 10 percent of donations are misused. Americans are generous, so that 10 percent is a number in the billions of dollars. That's why you shouldn't write a check until you've checked out the charity.
Here's the thing: There's no law requiring that any particular percentage of your contribution must go toward the cause. Poorly run charities may spend your money on executive salaries and additional fundraising instead of on charitable programs. In addition, for-profit solicitors who raise money for charities may keep most of the cash and give only a tiny percentage to the organization you intended to help. It's perfectly legal.
That's why you need to do your homework -- especially if you're prepared to make a generous gift. Charity watchdogs say at least 60 percent of the money a charity raises should go toward its stated mission. More is even better. You can ask the charity itself what portion of its proceeds actually does some good, but you may not get a straight answer. Some charities have been known to count telemarketing and direct mail campaigns as "educational" efforts.
Instead, check out the charity by contacting your state government and a private watchdog group. Many states require charities to register and provide basic information about their finances to operate legally in the state. Usually the office of consumer protection, the department of agriculture or the secretary of state carries out this function.
Some private groups scrutinize charities too. The BBB Wise Giving Alliance is probably the best known and now bestows a seal of approval upon charities that meet certain strict standards.
