How to Avoid Disaster Donation Scams

Contributor By: Z. Padmore

Don Hankins: Be wary of donation scams

The earthquake in Haiti on Jan. 12 created a humanitarian crisis of epic proportions. Two million of Haiti's 9 million residents were affected by the earthquake, which struck just 10 miles away from the capital city of Port-au-Prince.

Governments around the world have offered their support. China and the United States quickly delivered airplanes full of supplies with other countries are joining to pledge their support during this humanitarian disaster, along with millions of individuals through large and small donations.

Unscrupulous people can take advantage of this generosity, as seen in the weeks after the 2004 tsunami with reports of rampant donation scams. Criminals tried to capitalize on the disaster by creating fraudulent web sites, addresses, and even paraphernalia for their fabricated charity organizations.

For individuals who feel helpless or overwhelmed by images of the disaster, making a donation is one way to assist in relief efforts, but the key is to make sure your money gets to the right people.

Instructions

Step 1

Look for a BBB logo on the charity's website.

Check with the Better Business Bureau.

The Better Business Bureau issues reports on charities using the same metrics they apply to Fortune 500 companies. Organizations volunteer their information to be verified by a local or national BBB organization. Check their updated list to confirm your charity or organization is operating in good standing.

Step 2

Unicef and Red Cross team up to offer water at local organization.

Give to a charity already established at the disaster site.

There are local organizations that have served every community. In times of crisis, international organizations aid the local workers who have direct access to the area. Give directly to organizations with an infrastructure, staff, and direct connection to people of the disaster area. You can be assured that your donation will directly assist the lives of people by giving to a local organization since the donations will not be redistributed across an international fund.

Step 3

Is your charity reporting their earnings?

Find facts at Foundation Center.

The Foundation Center searches for an organization by name, location or EIN (business identification numbers). It searches for the organization's most recent tax declaration using a 990 tax form search. If your charity isn't listed, it may not be considered a non-profit organization or it has not filed its earnings within the past year.

Step 4

InterAction identifies first response organizations.

Be in the know and assess the need.

InterAction is a clearinghouse for U.S.-based non-governmental organizations (NGOs). It's a forum where leaders working on specific issues share best practices. They use their worldwide membership directory to highlight resident NGOs in a disaster zone. The NGOs offer a direct response to damaged areas as well as an account of areas in need. Read their reports to understand key recommendations from NGOs on the ground.

Step 5

Charity Navigator offers extensive reports.

Use Charity Navigator.

Charity Navigator is staffed with forensic accountants who analyze financial documents of NGOs and charities. These expert sleuths work to account for how each cent of donated money is used. If you have doubts about a charity, run the name through the navigator. You're sure to get a full report on its financial management.

Step 6

Track charity dollars.

Check nonprofit status at GuideStar.

GuideStar documents organizations tax return forms and other information associated with their EIN. GuideStar lists the most recent tax return and how much money is reported on annual income statements.

Look for organizations that give at least 75 percent of their funding to directly to their causes. If more than 25 percent is spent on administration costs, it means the organization is heavily staffed but may not be equipped for direct response to disasters.

Step 7

Avoid responding to scripted telemarketing calls.

Be wary of direct solicitations.

Few small organizations sponsor telephone drives in this Internet age. Be wary of callers reading from a script to donate to a disaster area. These people set up private businesses with names that sound like relief organizations. Once credit card information is given, it's routed to a personal account rather than an organization.

Also be leery of urgent email and texting campaigns. Your phone service provider may charge you hidden fees in order to complete the transaction. Established organizations use mainstream media channels to alert you of their need for donations.

Step 8

Earn tax deductions with your donation.

Donate money.

The best way to donate to an organization is to give money. Unless you have a direct contact in the disaster area, do not send clothes or other supplies. During an emergency zone, the postal delivery can take weeks to arrive at a location and the logistics of retrieving packages can become a nightmare. It's best to send money so organizations can identify and purchase the proper resources. Make sure to ask for a receipt that identifies your contribution as tax-deductible.

Step 9

Get others to donate to your charity.

Spread the word.

Unless you're a medically trained first responder, you should not go to the disaster site. Organizations do not have systems to house and feed volunteers. During the recovery period, there may a need for volunteers. Unfortunately before rebuilding begins, the focus is on medical response and evacuation.

After you have donated, spread the word to family and friends to encourage them to donate as well. Campaigning for your charity will alleviate the helpless feeling that often overwhelms those who want to do more.

Step 10

It takes years to rebuild after a disaster.

Commit to give long-term.

Disasters inspire people to give as an immediate expression of grief and care. Still most organizations seek long-term commitment. Consider spreading a donation of $240 into $20 donations each month. Your consistent donation helps keep the organizations fully staffed during the recovery months.

Giving in the time of disaster is important, but long-term commitment is even more important. Avoid donation scams and form a sustaining relationship with a charity.
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