Charity fraud shows why donors should be ‘wise givers’

Charges were filed this week against four cancer charities who allegedly misused millions of dollars of donations. According to the Federal Trade Commission, the suit represents one of the largest legal actions against charity fraud to date.

The four charities — Cancer Fund of America Inc., Cancer Support Services Inc., Children’s Cancer Fund of America Inc. and The Breast Cancer Society Inc. — and their directors are accused of bilking over $187 million.

“The defendants told donors their money would help cancer patients, including children and women suffering from breast cancer, but the overwhelming majority of donations benefitted only the perpetrators, their families and friends and fundraisers,” the FTC noted.

As David Graham wrote for The Atlantic, the situation is upsetting on many levels, because the charities preyed upon donors’ best intentions while making it harder for legitimate organizations to succeed in their own fundraising efforts.

“What is so pernicious about scams like this is that the very thing that makes them so outrageous is what makes them so effective,” Graham said. “Money given to scams … doesn’t just fail to help the intended recipients — it diverts cash away from real charities.”

Fraudulent charities also heighten anxiety among the many Americans with “giving hearts,” who often are uncertain about how to check the credentials of charities, noted Michelle Singletary, finance columnist for The Washington Post. She offered tips for becoming a “wise giver,” as well as resources for further research.

“You should ask at least two questions when you get a call from a charity fundraiser who piques your interest: What percentage of my donation will go to the charity? How much will go to the actual cause?,” Singletary wrote. “Of course, a fundraiser could conceal the truth, so that’s why you should look for independent assessments.”

Several organizations, including Charity Navigator and Charity Watch, rate charities based on how much of a donation is put toward a philanthropic program. According to a 2013 article from CNN Money, donors should look for groups that put at least 75 percent of donations toward direct aid.

“Next time you get a charitable solicitation from an organization you aren’t familiar with, give yourself a timeout,” Singletary said. “Put a sign next to your phone as a reminder to ‘stop and investigate.’ ”

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