Written by Alyssa Pry, Personal Finance reporter, Yahoo Finance, 12/3/18
After the shopping bender of the holiday weekend comes the sobering Giving Tuesday, a day to donate to charitable causes and give back to others.
Last year, Americans donated $300 million to charities globally, and Tuesday starts the “season of giving,” says Michael Thatcher, CEO of Charity Navigator, an organization that verifies and rates charities.
“The holiday season is a popular time to give because we’re already giving to our families, and we’re also thinking about possible tax implications from giving,” Thatcher says.
While people are inspired to give around the holidays, as well as during times of crisis, it can also be an opportunity for scammers. But spotting a scam can be difficult when it comes to charities, Thatcher says.
“One of the problems is when you make a donation to a fake charity, you may not necessarily know,” he says. “There’s no way to understand how your gift has been used, unless you’re actually following up with the organization,” he says.
When it comes to charity scams, scammers may send emails with the name of a recognizable organization, but there may be a slight misspelling in the name. Or scammers will call and be overly aggressive and try to guilt you into donating. They might also pretend you’ve already given to their charity, creating a false sense of familiarity.
Thatcher offers his four tips for avoiding a charity scam this holiday season.
1: Do your research
Thatcher says the best way to avoid getting scammed is to do your research to find out if the charity is legitimate. Find out if the charity is a 501c3; this means it has been approved by the IRS as a tax-exempt charitable organization. Thatcher says you should ask a charity for their employer identification number, and then use a site like Charity Navigator or Charity Watch, or check the IRS’s website to see if it’s legitimate.
Additionally, Thatcher recommends looking at the charity’s website and doing due diligence before donating any sum of money to an organization, especially if it’s unfamiliar to you. Call the charity and ask questions.
“There’s a common sense that we apply to how we make purchases: we look things up,” Thatcher says. “Do the same thing in your charitable giving.”
2: Don’t send money overseas
A red flag is being asked to wire money to an overseas charity.
“Sending money overseas has a lot of risks associated with it, particularly in your ability to get the money back if you’ve been scammed,” he says.
Thatcher says many legitimate overseas charities also have a U.S. component, so make a donation there instead, and avoid donating unless you’re already familiar with the overseas branch.
3: Consider how you’ll donate
Thatcher says there are a few ways to make your donation that will protect you from being scammed. One way is to go on the charity’s website directly and donate, or write them a check. You can also use Charity Navigator’s Giving Basket, which will not only make the donation, but provide you with a receipt and allow you to track where your money is going and what it will be used for.
Thatcher also recommends donating on a monthly basis instead of at the end of the year.
“You’ll find that they’re generally legitimate organizations that ask you for monthly donations, and it’s really helpful to the nonprofit to have them count on regular income coming on a monthly basis,” he says.
4: Follow up with your donation
Thatcher says you should view your charitable giving like an investment, and keep tabs on your money.
“Follow up on your investments the next year with the organization and ask them, how did it go with the money that I gave you? How can I help you this year? You’re investing in social change,” he says.
While you may want to avoid scams, Thatcher says the reality is that the majority of charities are legitimate and are doing good work. Being conscious of scams could motivate you to do more research to find an organization or cause you truly care about.
“The risk of being scammed means that maybe you’re going to do more research before you give,” Thatcher says. “That may mean you find a better organization to receive your dollars and the benefits will be higher in the long run.”