Making charitable donations can be fulfilling and also help your bottom line. Not only do you get to support causes that are important to you, but you can help reduce your taxable income.
Unfortunately, many bad actors are posing as reputable charities, and it’s up to you to protect your money. Luckily, there are ways to spot a scam and ensure the charity you’ve chosen is legitimate. Here’s how to make sure your next contribution is going to a good place.
Look For Warning Signs
Scammers will often use tactics that legitimate organizations won’t. It’s essential to familiarize yourself with potential red flags when considering a financial donation to a charity. Here are some common tactics used by illegitimate charities.
High Pressure - While most reputable charities do a great job of stressing how important your donation is, they’ll typically stop short of cranking up the pressure to donate immediately. If the contact you’re dealing with insists you donate right now, things may be amiss.
Gaslighting - One common trick scammers use is to cold call potential targets and thank them for a past donation they never made. If people think they’ve already given to a group, there’s no reason to believe it’s not for a good cause. Keeping a record of your contributions can help safeguard you against this technique.
Payment Methods - Most scammers don’t have the technology or the time to take donations in more traditional ways. If your contact insists you donate with cash, wire transfer, or gift cards, the odds are it’s not legitimate. Be alert if you ever come across a charity seeking donations in this manner.
The internet has created an environment for fraudulent charities to thrive, but it's also given regular individuals the tools to look into charities and their finances.
Be sure to look at watchdog websites like CharityData and Canada Revenue Agency to find detailed information about the group you’re interested in. These sites are loaded with data and are one of the surest ways to find a reputable organization with a mission you want to support.
Doing a simple internet search about a charity can also provide lots of information. You’re likely to spot any negative reviews or news stories right away, and you can deep-dive the group’s financials. Searching for the cause you're interested in can also lead you to top charities in the space.
While costs and overhead vary widely depending on the location and the cause, it’s recommended you only donate to organizations that put 60% or more of their funds towards their stated mission. This will help your money go further to support a cause and help you avoid scams.
If your internet research has proved inconclusive, there’s nothing wrong with contacting the charity yourself. Almost all reputable charities are happy to answer questions and alleviate concerns for potential donors.
If you end the conversation feeling uneasy or sensed the person would rather be doing anything else but answering your questions, you’re likely dealing with some shady characters. Legitimate organizations will gladly tell you their mission, how they allocate funds, and how their work has impacted the cause.
As we mentioned earlier, keeping detailed records of past contributions can help you avoid scams, but it can also help you track your donations and visualize the good they have done.
By following along with projects and updates from your favourite charities, you’ll get the satisfaction of knowing your donation has made things better in some way. Keeping detailed notes can also help you avoid unexpected payments and alert you to recurring contributions you didn’t want to sign up for. Record keeping will make tax time easier, so get in the routine of documenting any charitable gift.
Charities in every area are constantly in need, and there might not be a more fulfilling way to spend your money. Use these tips to stay safe, and start supporting the causes your care about today.