Fake Charity FIC

In March 2016, The Federal Trade Commission (FTC) handed over their final verdict — a death sentence to scammers.

After a lengthy review, the FTC forced The Cancer Fund of America (CFA) and Cancer Support Services to pay $76 million and hand over control of the organizations.

Their owner, James Reynolds, was to be permanently banned from non-profit work.

The sentence may sound harsh. But for many years, the Reynolds family operated their fake charity efforts to fund personal interests. The millions raised to supposedly help cancer patients was used to purchase jet skis, luxury cars, online dating subscriptions and lavish vacations.

The Reynolds story is not exceptionally outlandish; if you’ve read our blog on the 50 Worst Charities in America, you’re aware of the worst of the worst charities. Fake charities prey on the goodhearted nature of donors while profiting from the misfortunes of others.

Thankfully there are simple ways to strengthen the impact of your charitable dollar by following these five tactics for donating to an ethical charity instead of one of the worst charities in America.

How to Avoid a Fake Charity: 5 Tips
Avoiding a fake charity is all about doing your homework.

  1. Seek expert opinions
    Take your time and research an organization on your own using Charity Navigator, Guide Star, or Give.org. Each site offers unbiased, independent reviews of charitable organizations. Some compile lists of the best and worst charities and describe key factors involved in their ratings.
  2. Don’t let a familiar name fool you
    Fake charities often mislead donors by using names that are only slight variations of reputable organizations. Search any perspective charity online before you donate to make sure they’re the real deal.
  3. Confirm 501(c)(3) status
    Verify an organization’s tax-exempt status with the IRS to confirm their legitimacy. The IRS has created a 501(c)(3) charity search tool to aid donors.
  4. Steer clear of time-crunched charities
    All of these tips require you to do a little digging before you give. So you’ll often have to say “not now” to an organization when initially approached in-person or contacted over the phone. Fake charities often exploit actual disasters to get you to act fast. But don’t take the bait — reputable organizations understand you want your donation to have the greatest impact possible.
  5. How you give should never matter
    Cash, credit, check — or even better, your time. It shouldn’t matter how you plan to help a good cause. Be cautious of charities seeking specific payment methods. And run the other way if there is only one way to donate — such as online or over the phone. These red flags could signal the charity is a front for fraudsters hoping to get their hands on your payment data.

Have you ever encountered a fake charity? Share your story in the comments below.