By Steve Marshall
Alabama Attorney General
Americans are among the most generous people on the planet. So where do Alabamians rank? According to the website WalletHub, the Yellowhammer State was number four in the nation in charitable giving during 2016. Only Utah, Arkansas and Minnesota outperformed Alabamians in making contributions to their favorite cause. Being charitable is commendable. However, if you want your hard-earned donations to truly benefit someone in need and not feather the nest of a fraudster, then you need to be a smart giver.
The Alabama Attorney General’s Office monitors consumer fraud and provides some useful tips on how to avoid being scammed by fake charities or have your contribution stolen.
First things first, if you are contacted by a charity for a donation, check it out. Consumers may contact the Alabama Attorney General’s Office of Consumer Affairs at 1-800-392-5658 or through our office’s web page at www.ago.alabama.gov. You may also consult the Better Business Bureau’s Wise Giving Alliance comprehensive website at www.give.org.
If you want to make a donation to a charity, avoid cash gifts that can be lost or stolen. Write a check, don’t pay cash, to make your gift. For security and tax record purposes, it’s best to pay by check. Use the official full name of the charity, not initials, on your check.
If a solicitor says the contribution is being collected for a group in your community, call the local organization for which contributions are being solicited. Find out if they are aware of the fundraising campaign and if they have or will benefit from the funds raised.
Be cautious about giving your credit card number to a telephone solicitor. Even in a crisis, if you are unsure, ask for written information, including the nonprofit’s name, address, and telephone number. A legitimate charity or fundraiser will give you materials outlining the charity’s mission, how your donation will be used, and proof that your contribution is tax-deductible. It is better to take the time to give wisely than to throw away your donation.
Be skeptical if someone thanks you for a pledge you don’t remember making. If you have any doubt whether you’ve made a pledge or previously contributed, check your records. Be on the alert for invoices claiming you’ve made a pledge when you know you haven’t. Some unscrupulous solicitors use this approach to get your money.
Watch out for solicitations which use names that sound similar to well known charities. Some phony nonprofits use names that closely resemble those of respected, legitimate organizations.
When you are contacted by a charity, ask for identification. Many states, including Alabama, require paid fundraisers to identify themselves as such and to name the charity for which they’re soliciting. If the solicitor refuses, hang up and report it to local law enforcement officials or the Attorney General’s Office.
Find out how your donation will be distributed. Ask how much will go to the program you want to support, how much will cover the charity’s administrative costs, and if a professional fundraiser is used, how much is kept by the professional fundraiser?
Know the difference between “tax exempt” and “tax deductible.” Tax-exempt means the organization doesn’t have to pay taxes. Tax deductible means you can deduct your contribution on your federal income tax return.
Lastly, beware of non-charities that use meaningless terms to get your donation. For example, the fact that an organization has a “tax I.D. number” doesn’t mean it has received 501(C)(3) tax-exempt status,” which would allow your donation to be “tax deductible.” Both nonprofit and for-profit organizations must have tax I.D. numbers. An invoice that tells you to “keep this receipt for your records” doesn’t mean your donation is tax deductible or the organization is tax exempt.
Above all, don’t stop being charitable, just be smart. Make your contribution count!