Fake charities a year-round plague
Whether tying themselves to a prominent cause or preying on compassion related to a natural disaster, fake charities are a year-round plague. And fake charities do double damage — they steal from you and they steal from those you want to help with your donated dollars.
Fake charities are highlighted on the IRS Dirty Dozen list
The Dirty Dozen is an annual IRS list of 12 scams and schemes that put taxpayers and the tax professional community at risk of losing money, personal data and more. IRS Newswire issue number IR-2023-57 focuses on charity fakes.
The IRS provides four tips to protect against fake charities.
- Don’t give in to pressure (scammers often focus on an urgent need and pressure people into making immediate donations). Take your time.
- Verify first. Scammers frequently use names that sound like well-known charities to confuse people.
- Be wary about how a donation is requested. Avoid those asking for donations by gift cards or wiring money.
- Don’t give more than needed. Scammers are also hunting for personal information. Never give your Social Security Number or other personal information. Use a bank or credit care only once you’ve verified the charity.
Verify first
Before giving, you need to know whether the group asking for money is a charity recognized by the IRS.
The CharityCheck101.org directory includes every charity and nonprofit organization listed by the IRS as exempt from federal income taxes.
At the CharityCheck101.org directory will help you
- Avoid Fakes. As the IRS points out, not every group that looks, sounds or feels like a charity is truly a charity. Fake charities often adopt names similar to legitimate charities, siphoning off dollars needed for good works. Do a charity check to make sure the group is truly a charity.
- Confirm Identity. There are more than 1.8 million organizations recognized as tax-exempt by the IRS. Their names are often similar. Similar names easily produce confusion. Do a charity check to make sure you are supporting exactly the group you want.
- Confirm Tax Status. Do a charity check to find the organization’s tax status. Before you give, you should know the answers to these two questions –
- Is the organization recognized as a charity or nonprofit by the IRS?
- Will a donation be deductible as a charitable contribution?
Do your homework
While many charities do strong work with the moneys entrusted to them, others lack focus or management and produce little impact. Boost the impact of your giving — find and support excellent charities working on the causes you care most about.
Who evaluates and monitors charities?
Private businesses and their activities, finances and impact are evaluated and monitored by customers and investors.
But that’s not the case with charities. Most charities must register with the IRS and file annual information returns on Form 990. But the IRS is not set up to evaluate or monitor charities.
The best-known charity evaluator — CharityNavigator.org — has ratings for fewer than 10% of the nonprofits listed by the IRS. And CharityNavigator.org itself urges us donors to do our own due diligence on the charities we seek to support. To look at the financial health of the organization, its accountability and transparency and its results.
It’s up to us donors. We need to do our own research.
