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BBB warns public of charity scams

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GRAND RAPIDS, MI  - Following the explosions at the finish line of the Boston Marathon, charity scams have already emerged. The Better Business Bureau is offering warning signs to look for when dealing with donating.

BBB Wise Giving Alliance, the national charity monitoring arm of the Better Business Bureau, and BBB Serving Eastern Massachusetts, Maine, Rhode Island and Vermont, or BBB Boston, are working together to raise awareness about tragedy related extortion.

"Tragedies inspire people to give, but tragedies, whether natural disasters or manmade catastrophes, also inspire scammers to take advantage of that generosity," H. Art Taylor, president and CEO of the Alliance, stated in a press release. "Social media in particular makes it very easy to reach a lot of people quickly when emotions are running high and people feel the need to take action, any action, to help."

BBB Wise Giving Alliance produces reports on over 1,300 nationally soliciting charitable organizations, and local BBBs report on another 10,000 local and regional charities, according to their website.

Melissa Ames of the Mahoning County BBB says that she has seen instances of scams popping up after a disaster, but the organizations are not usually from the Valley.

She says its imperative for charity donors to do their homework before giving an organization their money.

"Watch out for organizations that will pull at your heartstrings but don't really give information about how they run their program," Ames says. "Research and see if they are accredited in disaster relief before making any donation."

Ames says that donors should always research or ask the organization how much of the money goes back to the cause. She says the BBB recommends that at least 65 percent gies back to the charity.

The BBB Wise Giving Alliance offers a list, "Ten Tips for Giving with Confidence," on their website. The recommendations include:

  • Thoughtful Giving - Take the time to check out the charity to avoid wasting your generosity by donating to a questionable or poorly managed effort. The first request for a donation may not be the best choice. Be proactive and find trusted charities that are providing assistance.
  • Help Spread the Wise Giving Word - Remind your friends and family to be cautious about giving requests in the wake of such a tragedy and ask them to spread the word as well. People are emotionally moved by events like these and may react before they have time to carefully consider.
  • State Government Registration - About 40 of the 50 states require charities to register with a state government agency (usually a division of the State Attorney General's office) before they solicit for charitable gifts. If the charity is not registered, that may be a significant red flag.
  • Respecting Victims and Their Families - Organizations raising funds should get permission from the families to use either the names of the victims and/or any photographs of them. Some charities raising funds for the Colorado movie theater and Newtown school victims did not do this and were the subject of criticism from victims' families.
  • How Will Donations Be Used? - Watch out for vague appeals that don't identify the intended use of funds. For example, how will the donations help victims' families? Also, unless told otherwise, donors will assume that funds collected quickly in the wake of a tragedy will be spent just as quickly. See if the appeal identifies when the collected funds will be used.
  • What if a Family Sets Up Its Own Assistance Fund? - Some families may decide to set up their own assistance funds. Be mindful that such funds may not be set up as charities. Also, make sure that collected monies are received and administered by a third party such as a bank, CPA or lawyer. This will help provide oversight and ensure the collected funds are used appropriately (e.g., paying for funeral costs, counseling, and other tragedy-related needs.)
  • Online Cautions - Never click on links to charities on unfamiliar websites or in texts or emails. These may take you to a lookalike website where you will be asked to provide personal financial information or to click on something that downloads harmful malware into your computer. Don't assume that charity recommendations on Facebook, blogs or other social media have already been vetted.
  • Financial Transparency - After funds are raised for a tragedy, it is even more important for organizations to provide an accounting of how funds were spent. Transparent organizations will post this information on their websites so that anyone can find out and not have to wait until the audited financial statements are available sometime in the future.
  • Newly Created or Established Organizations - This is a personal giving choice, but an established charity will more likely have the experience to quickly address the circumstances and have a track record that can be evaluated. A newly formed organization may be well-meaning but will be difficult to check out and may not be well managed.
  • Tax Deductibility - Not all organizations collecting funds to assist this tragedy are tax exempt as charities under section 501(c)(3) of the Internal Revenue Code. Donors can support these other entities but keep this in mind if they want to take a deduction for federal income tax purposes. In addition, contributions that are donor-restricted to help a specific individual/family are not deductible as charitable donations, even if the recipient organization is a charity.

 

 

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