The Red Flags of Charity Fraud

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ACFE STAFF

Whether donating to a natural disaster fund, a Go Fund Me page or even giving to an organization you know well, there is always a risk for fraud. During this year’s Charity Fraud Awareness Week, happening October 22-26, we would like to offer some of the best tips we have come across over the past few years in regards to charity fraud.

Just like in fraud examination, you should always use a healthy amount of skepticism when dealing with charitable entities, especially ones from organizations that you have never had contact with or heard of. Many charity scams send out mass emails, social media posts, letters and phone calls to attract donors shortly after a disaster occurs.

It is suspicious for a charity to:

  • Request donations in the form of a wire transfer or cash.

  • Convey incorrect details in the solicitation, such as thanking the recipient for a donation that he never made.

  • Use high-pressure tactics, such as pressing for immediate donations over the phone or requesting an overnight delivery service for payment.

  • Have a name that closely resembles a recognized charity.

  • Fail or hesitate to provide information about organizational leadership, contact information or other identification.

  • Operate a social media account (e.g., Twitter) with little or no activity prior to a disaster.

  • Operate a social media account with multiple handles on the same site.

  • Fail to provide receipts for tax-deduction purposes.

  • Request payments to the solicitor as opposed to the beneficiary.

There are also ways you can prevent becoming a victim. Do some research on an organization in a short amount of time using the following methods:

  • Search a charity evaluation site for the organization, such as Charity Navigator or GiveWell. These sites use several factors, such as transparency and how funds are used, to rate charities. Additionally, you can find the charity’s authorized contact information to compare to what solicitors have sent you.

  • Check with the applicable tax authority to see if the organization is tax exempt or has had its exempt status revoked.

  • Simply running an online search for “scam” and the name of the charity might bring up revealing results. Charity scams typically involve mass solicitations, and whistleblowers often identify potential scams online.

  • If responding to a solicitation, call the charity using its official contact information to ensure that it is the true solicitor.

  • Check to see if the charity is registered with a state government agency.

Donating to a charity is a noble effort that often requires some expediency, but we must still exercise basic caution to prevent fraudsters from stealing resources from those in need.

Charity Fraud Awareness Week is led by an international partnership of over 40 charities, regulators, professional representative bodies and other not-for-profit stakeholders working together to combat fraud against charities. This includes the Australian Charities and Not-for-Profits Commission, Chartered Accountants Worldwide, Charity Commission for England and Wales, Charity Commission for Northern Ireland, Fraud Advisory Panel, ICAEW, NZ Charities Services, Office of the Scottish Charity Regulator, U.S. Federal Trade Commission, U.S. National Association of State Charity Officials, as well as charities such as Oxfam, British Council, Macmillan, Help for Heroes and Amnesty International.