How To Avoid Charity Rip-offs
by Dan Roberts
Wherever you find people who are affected by incurable diseases, you will find others trying to relieve them of their money. Often hiding under the guise of nonprofit charitable organizations and carefully following all of the requirements imposed by law, they present a facade of benevolence, warning of impending danger, and then they beg “as much as you can afford” and “without delay” to help them eliminate it. Whether or not the danger is real is beside the issue. They only need to make enough people believe it.
Using terrorist tactics, their appeal is usually loaded with frightening rhetoric like “You or your loved ones may become victims of this sinister and life-wrecking disease,” or “It can sneak up on you and shatter your life without warning!” This is often followed by such comforting assurances as “If you act now, we will be able to continue our scientific assault on this crippling enemy.” Not only does language such as this often walk a thin line of truth, but it is designed to inflame the emotions of the solicitors’ target audiences, the majority of whom are either candidates for, or who are already affected by, the disease.
These tactics are unconscionable, and they are so successful that huge amounts of money are being pocketed. One organization that uses this approach, for example, reports annual revenues in the millions, but contributes only about 15% to researchers. The acceptable standard is no less than 50% to 60% (according to the National Charities Information Bureau and the Philanthropic Advisory Service of the Council of Better Business Bureaus).
Certainly there are worthy causes which deserve public support, but how does one determine which organizations are above board and which are simply wolves in sheep’s clothing? The following information may help to answer that question.
What should you do if you receive a solicitation letter or phone call from an unfamiliar charity?
A solicitation should be ignored if…
1. It causes you to feel pressured into sending money immediately. (This is designed to get you to react before you have had time to think.)
2. It causes you to feel afraid or unusually uncomfortable in any way. (The first goal of any legitimate service organization is to ease your mind, not to cause you distress.)
3. It makes promises that seem far-fetched. (It is simplistic to assume that money is all that stands in the way of a cure. It is also naive to believe that a single organization is in the unique position of “wiping out” a disease which is being researched on many fronts by the best minds in the world.)
4. It promotes the sender’s organization as the only hope. (The government is an easy target, but a disease which affects millions of people is going to have financial support from many sectors, due, if for no other reason, to the commercial viability of a potential cure.)
5. It is sprinkled with patronizing remarks. (They want you to think of them as your friend; but while patting you on the shoulder with one hand, they could be digging into your pocket with the other.)
6. It requests personal financial information (such as a credit card or bank account number).
7. It announces that you have won a prize, that you have been specially selected, or that you need to honor a donation pledge which you don’t remember making.
Phone calls, of course, are harder to ignore than letters, because gracious people find it difficult to hang up. The easiest way to end such conversations is to say, “I’m sorry, but I cannot make financial commitments by phone. Please mail the information to me, and I will be happy to look it over.” A legitimate organization will do so, and you have bought yourself some time to think more about it at your leisure–something an unethical solicitor will not want you to do.
How can you find out if an organization is legitimate?
You have the legal right to request a copy of their annual report (Form 990, including attachments), which will allow you to identify recent recipients of their grants, allocations, and other financial assistance expenditures and revenues. All nonprofit organizations are required by law to comply with your request, and they can only charge you for copying and mailing.
If the organization did not receive at least $25,000 in revenue during the previous year, there will be no Form 990 on file, but you may still ask them to send you a copy of their federal tax exemption application, supporting documents, and exemption-approval letter. This information should be sufficient to help you determine the legitimacy of the organization.
If they refuse to comply, you may get the information by calling or writing to the government regulatory agency of the state in which they are registered as a nonprofit organization. Depending upon the state, you will find this agency either under the Secretary of State, the Attorney General, the Consumer Affairs, or the Consumer Protection offices. There is also an excellent Internet site which discloses financial and organizational information on more than 700,000 charitable organizations. It is called GuideStar, and it is located at www.guidestar.org.
Another option is to contact one of the two principal “watchdog” groups, which can tell you whether or not a charity meets certain standards. They will be merging in the fall of 2001, but for now, here is how to get in touch:
The National Charities Information Bureau
19 Union Square
New York, NY 10003
Phone: (212) 929-6300
Web site: www.give.org
Council of Better Business Bureaus
Philanthropic Advisory Service
4200 Wilson Boulevard, Suite 800
Arlington, VA 22203-1838
Phone: (703) 276-0100
Web site: www.bbb.org
What should you do if you have been a victim of a scam, illegal activities, or unethical practices?
You may not want to go after the culprits yourself. They very likely have more money than you, and you just might end up spending your life’s savings on attorney fees and court costs. If, however, you have donated a large sum of money, and you think you stand a good chance of recouping your losses through litigation, by all means, pursue legal advice.
If your loss has been small, you might try politely, but firmly, expressing your feelings to the organization about their operation, and then request a refund. You may or may not receive an acceptable reply, but you might feel better. If you don’t, and you still want satisfaction, contact the appropriate state’s Attorney General and/or the corporation division of the Secretary of State. If they determine that an investigation is called for, they may ask that you file a report, along with supporting evidence.
The broadcast media (TV news magazines, local consumer reports, etc.) can also be an effective tool for exposing illicit operations without putting yourself in jeopardy. If your story has ratings appeal, reporters may be interested in airing it. They have the necessary connections, and they have a mass audience, so it may be worth a try.
Threatening the offending organization with these actions is a tempting thought, but it often does little good. They know that most people will not take the trouble to follow through, so they are probably willing to gamble. If you are not happy with their reaction to your initial complaint, move on to your next step, which may be as simple as chalking the whole thing up to experience.
Knowledge is a powerful weapon, and it can be our lack of it that will allow people to take advantage. The more people who have the right information, the less harm unethical solicitors can do, and the more money there will be for truly deserving charities. If you have not yet been victimized, knowledge may be your best defense. If, however, you have already learned the hard way, please pass this article along to others. Perhaps that can be your revenge.