Charity fraud explained

Charity fraud is the act of using deception to obtain money from people who believe they are donating to a charity. Often, individuals or groups will present false information claiming to be a charity or associated with one, and then ask potential donors for contributions to this non-existent charity. Charity fraud encompasses not only fictitious charities but also deceptive business practices. These deceitful acts by businesses may involve accepting donations without using the funds for their intended purposes or soliciting funds under false pretenses of need.

Examples

• On April 20, 1918, The New York Times published an article about a charity fraud committed by the Secretary of the Cripples' Welfare Society, George W. Ryder. Ryder pleaded guilty to using mail fraud to use the donations for his personal gain.^[1]
• On November 13, 1992, The New York Times released an article about fraudulent solicitations supporting a cause. Often, beside the cash register in stores, a collection is taken for a charity or for people in need. Although there have been many store owners that legitimately donate the spare change to the specified charity, there are a few who act fraudulently. In this specific case, the small-change donations were being kept by the vendors. The article states that the vendors paid a $2 per month fee to use the charity's name.^[2]
• After Hurricane Ian in the U.S. in 2022, the FBI Tampa Bay office warned that charity fraud scammers were at work, going door to door and making phone calls.^[3]

Prevention in the United States of America

There are controls and laws governing charities and businesses that accept donations. The Internal Revenue Service^[4] (IRS) has regulations that can be found on its website. The United States Federal Bureau of Investigation (FBI) provides online information about avoiding charity fraud, such as fraudulent schemes that emerge in the wake of natural disasters, claiming to be providing disaster relief. The Internet Crime Complaint Center maintains a list of guidelines^[5] to avoid charity fraud when making a donation.

Contrast with badge charity

Charity fraud is distinguished from badge charity in which the charity does exist, but an inordinate percentage of the funds donated are absorbed by professional fundraisers and operating expenses of the charity rather than the causes described in solicitations.

See also

• Clothing scam companies
• Confidence trick

External links

United States:

• Better Business Bureau's Wise Giving Alliance
• CharityWatch Charity Ratings
• Charity Navigator's giving tips including the 5 Steps to Informed Giving
• Federal Trade Commissiojn - Charity Fraud
• Give.org BBB Standards for Charity Accountability
• Haitian Earthquake Relief Fraud Alert
• IRS: Life Cycle of an Exempt Organization
• National Charity Seal Program

United Kingdom:

• Charity Commission - find out if a charitable organisation is formally registered

Notes and References

1. News: Charity Fraud Pleads Guilty . The New York Times . April 20, 1918.
2. News: Small-Change Donations Going to Vendors, Not Charities, Abrams Charges . Robert D. . McFadden . . November 13, 1992.
3. Web site: Saltzman . Marc . ‘Hurricane Ian’: Here come the scams. (And how to avoid them) . 2022-10-17 . USA TODAY . en-US.
4. Web site: Life Cycle of an Exempt Organization . 2017-08-10 . 2012-08-29 . https://web.archive.org/web/20120829004617/http://www.irs.gov/charities/article/0,,id=169727,00.html . dead .
5. Web site: Internet Crime Complaint Center (IC3) - Tips On Avoiding Fraudulent Charitable Contribution Schemes. www.ic3.gov.