Every dollar scam “charities” take in is a dollar that could instead have gone to a strong charity doing valuable work with the funds entrusted to it.

Join our Serious Givers email group now and we’ll send you our Top Tips for Avoiding [...]]]> Avoiding “charity” scammers is an important part of smart giving.

Every dollar scam “charities” take in is a dollar that could instead have gone to a strong charity doing valuable work with the funds entrusted to it.

Join our Serious Givers email group now and we’ll send you our Top Tips for Avoiding “Charity” Scammers — a handy list of things to check, watch for and avoid.

If the organization solicits donations in California, it should be current on its filings with the California Registry of Charitable Trusts. Note that most churches and government agencies are not required to file with the Registry.

Use the organization’s Federal employer identification number (FEIN) [nine digits, looks like 12-3456789] — if you don’t [...]]]>

If the organization solicits donations in California, it should be current on its filings with the California Registry of Charitable Trusts. Note that most churches and government agencies are not required to file with the Registry.

Use the organization’s Federal employer identification number (FEIN) [nine digits, looks like 12-3456789] — if you don’t have that, be sure to get the name right.

If the organization purports to be a §501(c)(3) charity and isn’t current on its filings, don’t donate.

Here’s a link to the Registry’s search page.

The connection between sleazy “charities” and paid telemarketing can’t be denied — they frequently travel together. Just take a look at the results so far from Operation [...]]]> Every dollar sleazy “charities” take in is a dollar that could instead have gone to a strong charity doing valuable work with the funds entrusted to it.

The connection between sleazy “charities” and paid telemarketing can’t be denied — they frequently travel together. Just take a look at the results so far from Operation False Charity headed by the Federal Trade Commission, including the lawsuits filed by the CA Attorney General’s Office.

Comment: Charities exist to do the work of their missions and causes. When they raise money from donors, donors have the right to expect that a high percentage of donated funds will go to the work. Donors should also expect that the charity will incur reasonable administrative costs to manage its operations, and reasonable fundraising costs to support its work.

People can debate what should be the minimum percentage of a charity’s expenditures that go to its mission or cause (i.e., programs) as opposed to administration and fundraising. But I can’t imagine that anyone would argue that 50% or less is a suitable level of spending on mission or cause.

Sleazy charities: Look at the three Santa Ana “charities” we recently named Charity Skunks – and you’ll see that on average a piddly 5.3% of their expenditures went to their purported missions. If only 5.3% of your spending goes to your mission, you’re at least sleazy, and you’re probably not a charity by most definitions.

Paid telemarketing: Our recent sampling of results from a telemarketing firm used by all three Santa Ana “charities” showed that (on average) of every dollar the telemarketer raised from donors, less than 15 cents went to the charity client. Counsel defended the small portion going to charity by saying the telemarketers “didn’t pay more to charities because they incurred high costs.”

The three Santa Ana sleazy charities referenced above were big users of paid telemarketing contractors. Sleazy charities and paid telemarketing together — is this a coincidence?

There are plenty of strong charities out there to support, that don’t use paid telemarketers.

For those charities that do use paid telemarketers, I’m adopting a “rebuttable presumption” approach against donating:

• I presume a charity that uses paid telemarketers is unworthy of my confidence or support (that is, they don’t get a penny from me),
• unless and until the charity rebuts the presumption by providing to me solid evidence (through its Form 990 and otherwise) that it is worthy, that its use of paid telemarketers is cost-effective and suitable in its overall operations, and that it appropriately uses the moneys entrusted to it.

Feel free to join me in this.

Note: Well-managed charities can and do make cost-effective use of their board members and other volunteers in calling donors — that’s quite different from paid telemarketing.

Don’t donate to an organization that refuses to provide its Form 990 — it either doesn’t want your support or has something to hide. And in either case, it is likely breaking the law.

A wealth of information is available from an organization’s most recent IRS tax return (Form 990, for example). In [...]]]>

Don’t donate to an organization that refuses to provide its Form 990 — it either doesn’t want your support or has something to hide. And in either case, it is likely breaking the law.

A wealth of information is available from an organization’s most recent IRS tax return (Form 990, for example). In addition to telling you a lot about how the organization spends the moneys entrusted to them, it will tell you about programs, people involved, cash reserves and debts.

Federal law requires tax-exempt organizations to make their Federal information (tax) returns publicly available. They can do so (i) by giving or mailing you a copy or (ii) by making them available on their own websites or on a site like guidestar.org. See Code of Federal Regulations 26 CFR Section 301.6104(d)-1 and 26 CFR Section 301.6104(d)-2 for the details.

Find a Form 990 on-line.

More information on our Red Light warning system.

First, do you have enough information about the charity? Do you have their latest IRS Form [...]]]> So, without that telephone call from that pleasant young man, you never would have known about the great work his charity is doing. He did you a favor, and you’d like to make a donation. Don’t do it!

First, do you have enough information about the charity? Do you have their latest IRS Form 990? I bet they didn’t send it to you.

Second, and the capper for me. Paid telemarketing is a horribly expensive way to raise money. Our recent sampling of reports filed with the CA Registry of Charitable Trusts showed that the telemarketer paid less than 15% of what was raised to the sponsoring charities — so at least 85 cents of every dollar donated went to fundraising costs! Not much support for that great work the young man told you about.

More information on our Red Light warning system.

There are many strong charities out there, doing valuable work and making careful use of the moneys entrusted to them. They deserve support.

Unfortunately, there are other organizations which do little (if any) meaningful work with the funds entrusted to them. We’ll call these “weak” charities. Some are even scams, dressed up in [...]]]>

There are many strong charities out there, doing valuable work and making careful use of the moneys entrusted to them. They deserve support.

Unfortunately, there are other organizations which do little (if any) meaningful work with the funds entrusted to them. We’ll call these “weak” charities. Some are even scams, dressed up in “charity” clothing.

We’ve created our Red Light warning system to help you stay away from weak charities.

A Red Light means STOP – do not donate your time or money to an organization that does this! We assign Red Lights by looking at the ways organizations spend money entrusted to them, whether or not they follow charity legal requirements, and other activities.

So, if a group is asking you to make a charitable donation and [...]]]> To accept donations that are deductible as charitable contributions, an organization must be a church, government organization or have received a ruling from the IRS. Those who have received such a ruling from the IRS are listed in IRS Publication 78.

So, if a group is asking you to make a charitable donation and it’s not a church or government organization — it should be listed in Publication 78.

Organization names are often similar. Obtaining its employer identification number (EIN) can help you be sure you’re focused on the right organization.

With its correct name and/or its EIN, you can check it out. If the group isn’t listed in Publication 78, STOP. There are other places for you to be generous — don’t do it with this organization.

More information on our Red Light warning system.