Many less than legitimate organizations do extremely well at appealing to most people’s desire to help others in need. We’ve all seen posts on social media and direct mail pieces that paint a heart-wrenching story that your emotions past your logic and motivates you to donate. However, regardless of the story being told, it’s best to research any organization requesting a donation before contributing. Although most charity organizations are legitimate, some deliver only a small percentage of the donations they receive to the people and causes they claim to be helping. Others are outright scams.
A case in point – the American Red Cross of Seattle. How could a Red Cross organization be a scam? As it turns out, very easily. According to Charity Navigator, (www.charitynavigator.org) “On August 7, 2018, the Washington State Office of the Attorney General reported on the operations of American Red Cross of Se-attle, an alleged charity, in the press release, “AG FERGUSON FILES LAWSUIT AGAINST NONPROFIT FOUNDER WITH TIES TO ORGANIZED CRIME.” It has come to our attention that this organization is not registered with the IRS, but is soliciting from the general public in violation of federal tax law. For this reason, we have issued a High Concern CN Advisory.
Charity Navigator also referenced a press release (https://www. atg.wa.gov/news/news-releases/ag-ferguson-files-lawsuit-against-non-profit-founder-ties-organized-crime) issued by the Washington State Attorney General’s office which states, “Attorney General Bob Ferguson today filed a lawsuit to shut down six fake nonprofit entities posing as well-known, international organizations…”
The most significant qualification a rating organization looks for is whether a charity is registered as a legitimate non-profit 501c(3) corporation. (Not all non-profits are charities. As an example, a 501c(6) corporation has non-profit status, but its purpose is typically to promote a common business interest.) Other areas of interest and concern are transparency and whether normal standards have been met. The Better Business Bureau’s Wise Giving Alliance (give. org) rates charities based on 20 standards for charity accountability. To receive Wise Giving Alliance approval, a charity must spend at least 65% of total expenses on program activities, spend no more than 35% of contributions on fundraising and include electronic access to its most recent IRS Form 990, which details an organization’s income and expenses. (Some charities are not rated because they’re too small, but their Form 990 should still be publicly available.)
In the Wise Giving Alliance’s Donor Trust Report, a surprising number of charities did not disclose the information needed for proper evaluation. That’s understandable for new organizations because the necessary paperwork can be cumbersome and time-consuming. However, it’s a red flag for established charities.
The bottom line – think and check before you donate.
