American families are being more careful than ever with their hard-earned money. Most families have had to cut back in some way, whether that means cutting out frivolous purchases, cancelling cable, or scaling back on vacations. When we do make purchases, we’re careful about them. We research all our options and find the best price. Donating to charity is not much different than making regular purchases. Many families have had to decrease the amount of money they donate and they are carefully considering who they donate their money to.
Personal experiences drive our desire to donate. If you’re a cancer survivor, you understand how vitally important cancer research is and might want to donate money to help increase the chances of finding a cure. If your family struggled to make ends meet when you were a child, you might feel strongly about donating to food pantries, homeless shelters, or other organizations that once helped your family survive.
The amount of money you can donate is obviously different for every individual and family. It is a personal decision driven by your religious beliefs, your income, and your personal desires to make a difference in the world. No one can help you decide how much to donate. But anyone who donates money to a charity should be sure that they are donating to a reputable charity that is using your money in the way they say they will.
There are many people out there who will gladly take your money and use it in whichever way they see fit – often for their own gain. When donating to charity it’s important that you protect yourself. There are many ways charities can scam you out of money.
The most frequent scam you will see are email scams. Sometimes they ask you to donate fund to help with a specific cause (i.e. Hurricane Katrina or the earthquakes in Haiti). Sometimes it will be a person who has hacked into the email account of someone on your contact list and is posing as that person. They will usually have an outrageous story about being out of the country, losing their passport and wallet, and they need you to wire them money immediately. Most of the time these emails are obviously a scam, even to the untrained eye. But since they frequently come from an email address you recognize, it might be easier than you think to be fooled. It is best never to respond to emails like this, let alone donate money.
Many scams, however, are not so obvious. There are plenty of organizations that seem valid. But what you don’t realize is that your money is not being used in the way you think. Or someone is simply posing as a representative from a legitimate organization and pocketing the money you donate. One example of a charity gone bad is the organization Feed the Hungry. Through their Cars for Kids program, they raised $430,000 through the sales of donated cars between 2002 and 2009. Only $7,900 of this money was used for charitable purposes. The New York Attorney General Andrew M. Cuomo filed suit against the organization.
Giving to charity is a noble and generous act. You can protect yourself and make sure you aren’t taken advantage of. Organizations such as Charity Navigator and the Better Business Bureau are designed to identify scams and verify that certain groups are legitimate. Both organizations provide backgrounds on hundreds of charities including tax status, management, financial statements, and more. Both sites also provide tips for avoiding the many scams that aim to exploit donators (click here to see Charity Navigator’s Top 10 Best Practices of Savvy Donors). Finally, the FBI also has a tip sheet for avoiding charity fraud.