NCL Personal Finance Issues
Recent wildfires in Colorado have destroyed hundreds of homes and have forced tens of thousands of residents to evacuate. In June, President Obama declared the situation a national disaster, and the Forest Service warned it could take weeks to get the blaze under control. After disasters such as this, many Americans try to help out those who have been affected by donating by charities that promise to assist the victims. However, NCL is warning consumers to be careful about what charity they choose, or risk becoming the victim of a charity scam.
Scam artists are opportunistic, and charity scams are a perfect illustration of this. Following high-profile disasters such as the 2004 Indian Ocean tsunami, the 2007 Virginia Tech shootings and the 2010 Haiti earthquake, there were numerous reports of consumers receiving solicitations from fraudulent charities. Regardless of the specifics of the disaster, the scammers use the visibility of these disasters in the news media to generate sympathy and cash from their victims.
Consumers should watch out for the following “red flags” for charity scams:
- The charity refuses to provide any documentation of their 501(c)3 non-profit status or other identifying information such as a mailing address, annual report or website
- You are pressured to commit to a donation immediately or are asked to provide sensitive personal information
- Requests for donations to be made in cash or via wire transfer
- Guarantees of sweepstakes winnings or other prizes if you donate
- Charities with unfamiliar names that you’ve never heard of
Before giving to a charity, be sure to check their reputation on sites like Charity Navigator and GiveWell.org, which rank charities based on efficiency, transparency and accountability. Be cautious if a charity contacts you first or pressures you to give money or information immediately. Legitimate charities give donors as much time as they need. Remember, the cause will be just as worthy tomorrow as it is today. Also, be sure to ask whether the person calling you represents the charity itself or a professional fundraising company. If the caller represents a professional fundraising company, be sure to ask how much of each donation they collect for “administrative costs” or “overhead.” It is not uncommon for such companies to take 80% or more of every donation for these fees.
After donating, you should still be thoughtful and careful about interacting with the charity. Many organizations continue to contact donors after a donation and may sell or rent your contact information to other organizations. If you are frequently contacted by organizations you do not wish to donate to, ask them to put your name on a “Do Not Call” list.
Keep track of your contribution(s) so you can put them down as tax deductions. If you give a large contribution or frequent contributions, feel comfortable asking for the organization’s annual report and financial statements. This will give you an idea of what the organization is currently doing with your and other people’s money.
Millions of people, both in the United States and worldwide, are suffering and charities do amazing work in benefiting the world. Unfortunately, scam artists masquerading as charities are only out for their own gain. They will take advantage whoever they come across in order to benefit themselves. Do not fall for their traps.