Kindhearted people are sometimes taken advantage of by poorly run or fraudulent charitable agencies, and figuring out how to tell the good from the bad can be difficult, says Patrick Atkinson. God’s Child Project was founded by Atkinson, and he is a strong advocate for philanthropy. He has several tips to share to help altruistic givers ensure that their donation makes it into the right hands.
Charities large and small make the news for unscrupulous practices and outright fraudulent behavior, notes Atkinson. The Red Cross is one such recent offender. According to a Huffington Post report, the disaster relief charity was the number one recipient of charitable donations after Super Storm Sandy, but seven months after the disaster, not even one third of the $303 million raised in the name of Sandy assistance had actually been spent on helping victims of the disaster.
The Red Cross said it was holding back some of the funds to help finance long term recovery efforts in the areas hit by the storm, but some critics of the agency said that more relief was needed immediately. The report notes that agencies like the Robin Hood Foundation distributed the whole of their donations within just four months.
The problem here, notes Atkinson, is not that the agency misled the public—they vowed to allocate all the money donated in the name of Sandy relief to that cause—but that the agency may have been acting differently than most donators expected they would. It is important, he notes, to learn about how the charities you are considering plan to use funds given to them.
Spotting a Scammer
Other charities, however, are outright scams. Spotting these unscrupulous organizations may seem difficult, but when you know the clues, red flags can be easy to spot.
Watch out for organizations that call you out of the blue and demand an immediate commitment. Phone solicitors and emails often pose as charities, demanding sensitive financial data in order to obtain your credit information for fraudulent purposes. Do not give out such information over the phone or online unless you have initiated the phone call or have navigated to the website yourself, so that you can be sure you are really giving to the agency and not to someone posing as them in order to rip you off.
Other organizations may be registered charities, but are actually no better than fronts designed to take in large amounts of money with which to pay exorbitant salaries to its executives. Reputable charities are happy to provide written information about their work and how they spend their financial resources. Avoid giving to any organization that is not transparent about its financial practices.
The name of a charity can also tip you off that they are up to no good. Official-sounding names that are similar to those of well-known agencies are often designed to benefit from the likelihood that they will be mistaken for a respected charity. The Tampa Bay Times list of the 50 worst charities is full of sound-alike organizations.
How To Check Up
Just because the name is unfamiliar, does not mean the charity is bad, notes Patrick Atkinson. God’s Child Project is one of many smaller charities that does good work, he says. But there are signs to be aware of before giving.
“There are many ways to decipher if a charity is scamming you or not, so it’s very important to take the safety precautions before donating money to ANY organization,” advises Atkinson.
Many watchdog agencies and investigative reporters exist to help keep charities honest. Atkinson suggests that everyone check with at least one such agency before giving. The IRS provides a search of charities that have been approved as such by the agency.
Other overseers include Charity Navigator, GuideStar.org, and the Better Business Bureau Giving Alliance. These organizations independently compile information on the accounting and giving practices of hundreds of organizations. They are good resources for discovering how your donation will be spent.
Transparency Is Key
Reputable organizations should be transparent in their accounting practices. While all charities have overhead costs that must be met, some givers are shocked to find out that only a small percentage of their donation actually goes to charitable work.
More than half off all the money raised by charities on the Tampa Bay Time’s list was given to solicitors who were paid to raise the money. Most organizations on the list paid over 80 percent of funds raised to these soliciting companies, making them little more than machines that raise money for company profit.
The average charity on the list spent less than 5 percent of their funds raised on direct aid to those in need. Watchdog groups say that no more than 35 percent of donations should go to fundraising costs. Charities should be able to provide, in writing, a breakdown of how their funds are used.
Many charities depend on the altruism of supporters to continue doing good work. A little common sense and investigation can ensure that you are giving your hard-earned money to a truly worthy cause.
“Don’t let scammers stop you from contributing to the well-being of others,” urges Patrick Atkinson, God’s Child Project founder.
Jennifer Davidson contributed to this article.