Natural Disasters

How to Avoid Charity Scams

According to the Better Business Bureau, it happens as regular as clockwork. Within days of any natural or man-made disaster, some people will try to take advantage of human nature to assist victims of the tragedy.

Whilst we would encourage the public to contribute to helpful causes that will assist the families and victims of any catastrophe, donors should make certain, that the charity is properly registered with appropriate government agencies, that it describes exactly what it will do to address the needs of victims, and that it is willing to provide written information about its finances and programs.

The Better Business Bureau advises that donors should consider the following tips when giving in the wake of a tragedy or disaster:

  • Be wary of appeals that are long on emotion, but short on describing what the charity will do to address the needs of victims and their families.
  • If you contribute, do not give cash. Make a check or money order out to the name of the charitable organization, not to the individual collecting the donation.
  • If you decide to contribute online, find out more about the charity before making a contribution and be aware of red flags. For example, some charities imitate the name and style of a well-known organization in order to confuse people. Also, when clicking on the link to "donate", look at the organization's URL in the browser window. Exercise caution if the domain name is hidden, is not familiar to you, or is not the same as the one stated in the text of the link.
  • Watch out for excessive pressure for on-the-spot donations. Be wary of any request to send a "runner" to pick up your contribution.
  • Do not give your credit card number or other personal information to a telephone solicitor or in response to an email solicitation. Ask the caller or sender to provide you with written information on the charity's programs and finances.
  • Do not hesitate to ask for written information that describes the charity's program(s) and finances such as the charity's latest annual report and financial statements. Even newly created organizations should have some basic information available.
  • Be wary of charities that are reluctant to answer reasonable questions about their operations, finances and programs. Ask how much of your gift will be used for the activity mentioned in the appeal and how much will go toward other programs and administrative and fund raising costs.
  • See if the charity's appeal explains what the charity intends to do with any excess contributions remaining after they have fully funded the disaster relief activities mentioned in solicitations.
Donors can obtain further advice on giving and access reports on U.S. charities by visiting http://www.give.org, the website of the BBB Wise Giving Alliance, the national charity watchdog affiliated with the Better Business Bureau system. The national charity reports produced by the Alliance reports specify if the charity meets the BBB Standards for Charity Accountability which addresses various charity governance, finances, fund raising and solicitations issues. Reports on local charities are available through your local BBB office. If a donor believes they may have been victimized by a questionable national charitable appeal, he/she can file a complaint with the BBB Wise Giving Alliance or contact the local BBB for assistance with complaints about local charities.

In addition to checking with the BBB Wise Giving Alliance, donors should consider the following tips:
  • Donors should be wary of any charity that is inexperienced in carrying out relief efforts but is suddenly soliciting for hurricane assistance. Although well intentioned, such organizations may not have the ability to quickly deliver aid to those in need.
  • Be wary of appeals that are long on emotion, but short on describing what the charity will do to address the needs of victims and their families. Also see if the charity's appeal explains what the charity intends to do with any excess contributions remaining after they have fully funded the disaster relief activities mentioned in solicitations.
  • As with all other disaster relief situations, most relief charities prefer financial contributions rather than donated goods. This enables them to purchase needed items near the disaster relief site(s) for easier distribution. The collection and delivery of inappropriate donated items can also clog transportation channels and delay more vital items in getting through to disaster victims.
  • Donors can visit the charity reports section of this website to access detailed evaluative reports on many of the relief organizations providing assistance. If you do not see a report on the relief organization you have in mind, encourage the organization to enroll with the Alliance at give.org so that the Alliance can prepare an evaluation in relation to the comprehensive Standards for Charity Accountability.
  • If you contribute, do not give cash. Make a check or money order out to the name of the charitable organization, not to an individual collecting the donation.
  • If you decide to contribute online, find out more about the charity before making a contribution and beware of red flags. For example, some charities imitate the name and style of a well-known organization in order to confuse people. Also, be wary of any spam or email message asking you to make a contribution. In what is known as a "phishing" scam, such messages may link to a "false" website that looks just like the website of an established relief charity. This could be a ruse to get you to share your credit card or other personal information.
  • Watch out for excessive pressure for on-the-spot donations. Be wary of any request to send a "runner" to pick up your contribution.
  • Do not give your credit card number or other personal information to a telephone solicitor or in response to an email solicitation. Ask the caller or sender to provide you with written information on the charity's programs and finances.
  • Do not hesitate to ask for written information that describes the charity's program(s) and finances such as the charity's latest annual report and financial statements. Even newly created organizations should have some basic information available.
  • Be wary of charities that are reluctant to answer reasonable questions about their operations, finances and programs. Ask how much of your gift will be used for the activity mentioned in the appeal and how much will go toward other programs and administrative and fund raising costs.
  • To help ensure your contribution is tax deductible, the donation should be made to a charitable organization that is tax exempt under section 501(c)(3) of the Internal Revenue Code. Go to IRS Publication 78 on www.irs.gov for a current list of all organizations eligible to receive contributions deductible as charitable gifts.


FTC Charity Checklist
The Federal Trade Commission advises that you consider the following precautions to ensure that your donation benefit the people and organizations you want to help. They apply equally to any charity appeal, not just those following a natural disater.

  • Be wary of appeals that tug at your heart strings, especially pleas involving patriotism and current events.
  • Ask for the name of the charity if the telemarketer does not provide it promptly.
  • Ask what percentage of the donation is used to support the causes described in the solicitation, and what percentage is used for administrative costs.
  • Call the charity to find out if it's aware of the solicitation and has authorized the use of its name.
  • If the telemarketer claims that the charity will support local organizations, call the local groups to verify.
  • Discuss the donation with a trusted family member or friend before committing the funds.
  • Don't provide any credit card or bank account information until you have reviewed all information from the charity and made the decision to donate.
  • Ask for a receipt showing the amount of the contribution and stating that it is tax deductible.
  • Understand that contributions made to a "tax exempt" organization are not necessarily tax deductible.
  • Avoid cash gifts. They can be lost or stolen. For security and tax record purposes, it's best to pay by check - made payable to the beneficiary, not the solicitor.

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on wise giving, visit www.ftc.gov/charityfraud or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.