Make Your Dollars Count: Avoiding Fraudulent Philanthropy During a Crisis

As our nation faces the crisis of Hurricane Harvey, millions of people are asking themselves, “What can I do?” We see the images and videos on the news and want to know how we can get resources to those in need in the affected areas. We want to help, and that instinct is a wonderful response.

Sadly, while so many of us want to do what’s right in a crisis like this one, there are also those who see crisis as an opportunity to profit fraudulently. Around every corner, both online and off, are those who will take your willingness to give and exploit it for their own gain.

To ensure your time and treasure is donated to organizations that will immediately deploy those resources on the ground, consider these tips and research tools.

Every donation requires research! Charities in the United States are highly regulated and required to disclose financial results in a Form 990 with the IRS. All 990 forms are public and easily searchable on a site like Guidestar.org. If you are considering donating to a nonprofit organization, even if it is one that is widely known, take the time to:

  • Google the organization, at the very least. Don’t just view the first page. Click on the “news” tab on Google to find any recent concerning events or red flags you might see.
  • Find the organization’s 990. While these documents can be dense and difficult to read, one clear place to see concern is in the breakdown of a nonprofit’s expenses. For example, one charity often listed at the top of “fraudulent charities” lists has approximately $14 million in expenses, nearly $9 million of which are listed as “fundraising” or “administrative” expenses. This means only 35% of dollars donated are being deployed in actual programming. A charity spending more than 30% on admin or fundraising should raise a red flag.

Beware of giving money directly to individuals. Tools like GoFundMe are a recent addition to the philanthropy landscape, allowing individuals to raise funds directly in a time of crisis. When considering whether to give on one of these websites, I’d recommend asking the following questions: Do you know the individual running the page personally? If so, would you be comfortable handing them cash and trusting them to ensure that cash is deployed honorably? If you answered yes to these questions, you may want to consider this route of donation. However, if you do not know the person who is running a campaign, you cannot be certain the money will be deployed in the way they describe.

National vs. local. Often, our default giving choice in a crisis will be to a large, national, nonprofit organization whose name is most recognizable. These organizations are not bad, by any means. But consider the length of time it might take for that organization to deploy resources on the ground. Instead, you may want to consider supporting a nonprofit organization close to the crisis site that is engaging resources on the ground today. NPR compiled a list that has both national and local resources included and has broken them out by topic to give you the opportunity to give in areas you are most interested in: http://www.npr.org/sections/thetwo-way/2017/08/28/546745827/looking-to-help-those-affected-by-harvey-here-s-a-list

It’s tempting, in a time of crisis, to simply do what’s easiest – giving $10 here or $10 there. I’m confident if you take just 10 or 15 minutes to do the research and make a gift, your funds will be used more wisely. Your good instinct to do something and help someone will then be felt on the ground and not just in a bank account.

Posted in: CSR