You may have contributed some of the $212 billion raised for charities in 2001. Unfortunately, a
portion of that amount may have been misused or ended up in the pockets of fraudulent solicitors. With
more than 700,000 federally recognized charities soliciting for charitable contributions, it pays to
be cautious when making a donation.
Your charity dollars are an investment in your community, the nation and the world. It's wise to
use just as much caution when making your charitable giving decisions as you do when making other
decisions affecting your overall financial picture.
Paid Fund-Raisers
Some charities find it efficient to pay professional fund-raisers - to handle large scale mailings,
telephone drives and other solicitations - rather than use their own staff or volunteers.
Professional fund-raisers are in business to make money and are entitled to keep a portion of the
money they collect. If you're solicited for a donation, you may want to ask if the caller is a paid
fund-raiser and what percentage of your donation the fund-raiser will keep. If you're not
comfortable with the amount, you may want to donate to a different organization, or send your
donation directly to the charity so that they benefit from the full amount of your check.
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Reducing Telephone and Direct Mail Solicitations
If you feel overwhelmed with direct mail requests for donations, you can help to reduce the number
of those solicitations. Typically, when you donate to a charity, your name is placed on the
charity's mailing list. The charity uses this list to re-contact you and often rents it or
exchanges it with other organizations. You can stop the sharing of your information by including a
note with your donation asking the charity not to rent, sell or exchange your personal information
and donation history. You also can ask a nonprofit organization to limit its donation requests to
once or twice a year. If the organization fails to honor your requests, you may wish to find a
different charity to support.
The Federal Trade Commission's (FTC) Telemarketing Sales Rule applies to telemarketers who make
calls across state lines on behalf of charitable organizations. The Rule restricts calling times to
the hours between 8 a.m. and 9 p.m. The Rule also requires telemarketers to promptly identify the
charitable organization they represent and disclose that the purpose of the call is to ask for a
contribution. Telemarketers may not mislead or lie to obtain a contribution. A consumer who does
not want additional telephone calls from a paid fund-raiser can ask to be placed on the
fund-raiser's "do not call" list. If the fund-raiser calls again, they may be subject to a fine of
up to $11,000.
The federal government has created the National Do Not Call Registry - the free, easy way to reduce
the telemarketing calls you get at home. To register, or to get information, visit www.donotcall.gov,
or call 1-888-382-1222 from the phone you want to register. You will receive fewer telemarketing
calls within three months of registering your number. It will stay in the registry for five years
or until it is disconnected or you take it off the registry. After five years, you will be able to
renew your registration.
Many states have their own regulations regarding charitable solicitations. Some require paid
fund-raisers to identify themselves as such and to name the charity for which they are soliciting,
even if the call is in-state. To learn about the law in your state, check out links to state
charity regulators at the National Association of State Charity Officials Web site - www.nasconet.org.
Legitimate direct mail solicitations often list the contact information for regulators in the
states they solicit.
The Direct Marketing Association's (DMA) Mail Preference Service lets you opt out of receiving
direct mail marketing from many national companies for five years. When you register with this
service, your name will be put on a "delete" file and made available to direct-mail marketers.
However, your registration will not stop mailings from organizations that are not registered with
the DMA's Mail Preference Service. To register with DMA, send your letter to:
Direct Marketing Association
Mail Preference Service
PO Box 643
Carmel, NY 10512
Or register online at www.the-dma.org/consumers/offmailinglist.html.
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Charity Checklist
Consider the following precautions to ensure that your donation dollars benefit the people and
organizations you want to help. They're good practices whether you're contacted by an organization's
employees, volunteers or professional fund-raisers, soliciting donations by phone, mail or in person.
- Be wary of appeals that tug at your heart strings, especially pleas involving patriotism
and current events. Although the Department of Defense does not endorse any specific war
related charity, you can visit their Web site at www.army.mil/operations/oif/FAQ.html to
find out about military relief societies that provide assistance to U.S. Service members and
their families.
- Ask for written information about the charity, including name, address and telephone number. A
legitimate charity or fund-raiser will give you information about the charity's mission, how your donation
will be used and proof that your contribution is tax deductible.
- Check out the charity's financial information. For many organizations, this information can be found
online at www.guidestar.org or at GuideStar, 427 Scotland Street, Williamsburg, VA 23185; 757-229-4631.
- Ask for identification. The Telemarketing Sales Rule requires for-profit fund-raisers to disclose the
name of the charity requesting the donation. Many states require paid fund-raisers to identify themselves
as such and to name the charity for which they're soliciting. If the solicitor refuses to tell you, hang up
and report it to law enforcement officials.
- Call the charity. Find out if the organization is aware of the solicitation and has authorized the use
of its name. If not, you may be dealing with a scam artist.
- Check with local recipients. If giving to local organizations is important to you, make sure they will
benefit from your generosity. If a charity tells you that your dollars will support a local organization,
such as a fire department, police department or hospital, call the organization to verify the claim.
- Watch out for similar sounding names. Some phony charities use names that closely resemble those of
respected, legitimate organizations. If you notice a small difference from the name of the charity you
intend to deal with, call the organization you know to check it out.
- Know the difference between "tax exempt" and "tax deductible." Tax exempt means the organization
doesn't have to pay taxes. Tax deductible means you can deduct your contribution on your federal income
tax return. Even if an organization is tax exempt, your contribution may not be tax deductible. If a tax
deduction is important to you, ask for a receipt showing the amount of your contribution and stating that
it is tax deductible.
Beware of organizations that use meaningless terms to suggest they are tax exempt charities. For
example, the fact that an organization has a "tax I.D. number" doesn't mean it is a charity; every
nonprofit and for-profit organization must have a tax I.D. number. And an invoice that tells you to
"keep this receipt for your records" doesn't mean that your donation is tax deductible or that the
organization is tax exempt.
- Be skeptical if someone thanks you for a pledge you don't remember making. If you have any
doubts about whether you've made a pledge or previously contributed, check your records. Be on
the alert for invoices claiming you've made a pledge. Some unscrupulous solicitors use this
approach to get your money.
- Ask how your donation will be distributed. How much will go to the program you want to support
(as opposed to other programs of the nonprofit), and how much will cover the charity's administrative
and telemarketing costs?
- Refuse high pressure appeals. Legitimate fund-raisers won't push you to give on the spot.
- Be wary of charities offering to send a courier or overnight delivery service to collect your donation
immediately.
- Consider the costs. When buying merchandise or tickets for special events, or when receiving "free"
goods in exchange for giving, remember that these items cost money and generally are paid for out of
your contribution. Although this can be an effective fund-raising tool, less money may be available for
the charity.
- Be wary of guaranteed sweepstakes winnings in exchange for a contribution. According to law, you
never have to donate anything to be eligible to win.
- Avoid cash gifts. Cash can be lost or stolen. For security and tax record purposes, it's best to pay
by check.
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Charity Check-Up
Many charities use your donations wisely. Others may spend much of your contribution on
administrative expenses or more fund-raising efforts. Some may misrepresent their fund-raising
intentions or solicit for phony causes.
Before you open your checkbook, check out the charity you're considering with these organizations:
BBB Wise Giving Alliance
4200 Wilson Boulevard, Suite 800
Arlington, VA 22203
(703) 276-0100
www.give.org
American Institute of Philanthropy
3450 Lake Shore Dr., Suite 2802 E
Chicago, IL 60657
(773) 529-2300
www.charitywatch.org
GuideStar
427 Scotland Street
Williamsburg, VA 23185
(757) 229-4631
www.guidestar.org
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Your Local Charity Registration Office
Most states require charities to be registered or licensed by the state. Check with your state
Attorney General's office or Secretary of State. You can find a list of state charity regulators
at the National Association of State Charity Officials Web site - www.nasconet.org.
Many smaller, newer or local charities may not be rated by the organizations listed here. Some
fraternal organizations, such as police and fire groups may not be rated at all. If the charity
seeking your donation is not listed or rated, follow the precautions listed under Charity Checklist
to help you determine whether an organization deserves your donation dollars.
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Where to Complain
If you believe an organization may not be operating for charitable purposes, is making misleading
solicitations or is ignoring requests to be placed on a "do not call" list, contact your state Attorney
General, your local consumer protection office or the Federal Trade Commission
The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the
marketplace and to provide information to help consumers spot, stop, and avoid them. To file a
complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free,
1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing,
identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database
available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
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