Charity fraud

Charity fraud is the act of using deception to get money from people who believe they are making donations to charities. Often a person or a group of people will make material representations that they are a charity or part of a charity and ask prospective donors for contributions to the non-existent charity. Charity fraud not only includes fictitious charities but also deceitful business acts. Deceitful business acts include businesses accepting donations and not using the money for its intended purposes.

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 in order to use the donations for his personal gain.

• On November 13, 1992, The New York Times released an article about fraudulent solicitations supporting a cause. Often, beside the cash register in stores is a collection being taken up for a charity or for people in need. Although there are several real cases of people with ailments that need donations, there are several donations that are used as a marketing scam. In this specific case, the small-change donations were being kept by the vendors. The article states that the vendors paid a two dollar per month fee to use the charity’s name.

• On May 27, 2009, CNN reported the arrest and sentence of five leaders of one of the largest Muslim charities. These men were found guilty of using donations to aid a Palestinian militant organization labeled as terrorists by the United States.

Prevention in the United States of America

There are several controls as well as laws governing charities as well as businesses that accept donations. The Internal Revenue Service (IRS)[1], along with the Better Business Bureau (BBB)[2], has regulations in place that can be found on their websites.

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 to avoid charity fraud when making a donation.[3]

It is advised that people should not only follow certain guidelines when they donate but that they should also consult a list such as the on listed on the BBB’s website. This list includes the participants in the BBB Wise Giving Alliance's National Charity Seal Program. Participants in this program have met the Standards for Charity Accountability and may have, for a fee, display the seal logo on their websites as well as any other printed documents.[4]

See also

• Confidence trick

External links

• US: U.S.(FTC.gov) information regarding charity fraud
• US: Charity Navigator's giving tips including the Top 10 Best Practices of Savvy Donors
• US: The American Institute of Philanthropy [5] and the Better Business Bureau's Wise Giving Alliance can also be consulted.

• UK: use the Charity Commission to find out if the organisation you want to support is formally registered.
  • Its Inquiry Reports list and give details on its latest investigations
• UK: Intelligent Giving gives an independent analysis of a charity's transparency for prospective donors(UK)
  • Rumours about fraud and related activity are discussed in its Watchdog section
• Charity On Trial: What You Need To Know Before You Give by Doug White 1
• US: [6] Life Cycle of an Exempt Organization
• US: [7] Standards for Charity Accountability
• US: [8] Haitian Earthquake Relief Fraud Alert
• US: [9] National Charity Seal Program