A Wolf in Sheep’s Clothing

Charities are everywhere in the 21st century. Today, we are urged to save the children, Africa, animals, the homeless, the dispossessed and even ourselves. With thousands of charities in existence, many charitable scams have flourished. Even nonprofits, while they aren’t outright scams, go to great lengths to conceal where their money goes.

The IRS doesn’t audit the majority of charities and there are few restrictions on how they spend the money they receive. The Supreme Court recently decided that for-profit fund-raisers can legally keep all the donations they get in a charity’s name, provided they don’t lie about how much is actually going to the charity.

Charity frauds date back to the early 1900s when the New York Times published an article about a charity fraud committed by the Secretary of the Cripples’ Welfare Society, George W. Ryder. He pleaded guilty to using mail fraud in order to use the donations for personal gain.

When the American Red Cross revealed plans to divert donations from it’s 9/11 fund to other causes, they ended up changing its policy so the money would rightly go to the victims and their families. Also, in the early 1990s the United Way CEO was convicted of defrauding the charity and a finance officer that pleaded guilty to embezzling $1.9 million.

With the illnesses of thousands of firefighters and police officers after 9/11 and the recent death of a Toronto-area police officer, many charity scams are benefitting from public servants. Unlike in the past where a police officer’s widow and children would be left penniless, public servants now routinely receive generous severance packages for their troubles. Potential donors should be proactive by visiting the police or fire department and inquiring whether there is an official foundation or fund and whether they are benefiting the right people.

Americans lose $20 billion annually to charity fraud. Experts say that an organization like Save the Children – a highly efficient charity – can easily be confused with an organization like Feed the Children – a less efficient charity.

Several scams began circulating just days after the Haiti earthquake. One scam, modeled off the advanced letter fee fraud, which sends a letter to victims requesting for an urgent business transaction using Western Union. It mimics the British Red Cross’ appeal for donations preceding the earthquake, beginning with a description of the disaster and the fact that “thousands of Haitians are in desperate need of humanitarian assistance.” There is no record of the real British Red Cross to ever have requesting donations through Western Union.

It has been noted that donors should use their head instead of their hearts when giving their money away. Donors must consult with legitimate charities list that indicates which charitable organizations are safe to donate and where donor’s funds will be directed appropriately. With the multitude of fake charities combing the web, people are encouraged to be more proactive in their donations, and do extensive research about the charity and their objectives before committing to donate to a single charity.

– Curtis Sindrey

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