As the owner of a small business, Crystal Krause likes to give back to her community.
So when a sports marketing company asked for a charitable contribution from her business, Power Moves Yoga in Batavia, to the local high school, she signed up to sponsor the football team, which included an opportunity to advertise her yoga studio on T-shirts and cups and receive shout-outs at games.
“Being a local yoga studio, we volunteer all the time,” says Krause, 34. “We give donations to all kinds of charity events. So to donate to the high school just seemed like, well, of course, we will. I didn’t think anything of it.”
After giving more than $1,000, Krause got a low-quality, smeared T-shirt in the mail that included a wrong phone number for her studio and a logo taken from the business’s Facebook page.
Unhappy, Krause unsuccessfully tried to reach the sponsorship company. So she called the high school directly and found out the school didn’t receive any of the money and only accepts donations through its athletic boosters.
Krause and her husband got their money back by disputing the credit-card charge. But now she thinks twice before donating when other fundraisers ask.
“Now, I’m hesitant,” she says. “Now, I have to do more research each and every time and ask for tax exempt forms just because I’m so skeptical of people trying to scam and just get free services or free money.”
Americans gave more than $400 billion to charities in 2017, according to the annual Giving USA report by the Giving USA Foundation and Indiana University’s Lilly Family School of Philanthropy.
Scammers try to tap into that giving spirit with a variety of schemes.
“People want to give to veterans,” says charitable giving expert Sara Nason, formerly of Charity Navigator and founder of the consulting firm Nantahala Strategies. “They want to give to kids who are underfunded. They want to help, but oftentimes they can be taken advantage of because people kind of assume that everyone asks for money out of the goodness of their heart.”
Charity scams making the rounds
One type of scheme involves creating charities with names that are similar to well-established nonprofits, according to CharityWatch. For example, the American Red Cross is not the same as “Red Cross of Americas,” a name allegedly created by a North Dakota man to piggyback off the famous relief organization. Last March, he was hit with a cease-and-desist order by officials in that state.
In another case, four Indiana residents were charged last February with stealing more than $125,000 through the “Wounded Warrior Foundation” and “Wounded Warrior Fund,” which sound like the well-known Wounded Warrior Project.
“People really need to be careful that they’re giving to legitimate organizations or people and not just scammers,” says Daniel Borochoff, president of CharityWatch. “[With] sob stories, people have to be particularly careful … They get too emotional about wanting to help, and they don’t think about it.”
Other frauds often show up on crowdsourcing platforms, especially after natural disasters or tragedies. Scammers create fake stories on sites like GoFundMe, but then the money doesn’t reach people in need.
Borochoff advises giving to these online campaigns only if you know or respect the organizers.
“It’s far better to give to a nonprofit organization because they have internal controls,” Borochoff says. “They have checks and balances. They have a board of directors that oversee it.”
How to protect your charitable gift
Experts say the safest way to give is by check or credit card.
And examine your billing statements to make sure the charity charged the agreed-upon donation and not a recurring amount.
“If the charitable organization wants you to pay by gift card or a wire transfer, then that’s likely to be a scam,” says Todd Kossow, Midwest regional director for the Federal Trade Commission.
More tips to avoid charity scams
- Do your research. Check out charities online at Give.org, CharityWatch.org, CharityNavigator.org and GuideStar.org. GlobalGiving.org researches organizations overseas.
- Slow down. Scammers often use high-pressure tactics to get consumers to send money quickly.
- Ask for the Employer Identification Number, or EIN, and IRS Form 990. Check the EIN at IRS.gov to see if the organization is a registered 501(c)(3) charity. The Form 990 shows how the nonprofit spends money. Experts say that, at the very least, 65 percent should go toward programs.
- Contact the charity directly. Make donations through the charity’s website or by calling its direct phone number, rather than giving in response to a phone or email solicitation.
This is the fifth story in the series “Be On Guard,” reported by the Chicago Sun-Times and made possible through the support of AARP Illinois. The AARP Fraud Watch Network can help protect you from frauds and scams. Call this free helpline (877) 908-3360 to speak with volunteers trained in fraud counseling.