Charity Scams

Due years of considerable scandal of misuse of funds within nonprofits, the IRS has made non-profit tax information available to the public.  As a result, many charities must now be more transparent with the public about their finances and tax-exempt status online, as they begin to comply with the demands of accountability from those who are funding their services. 

Donors continue to be more suspicious and less trusting today, and no longer assume that all charities are good simply because they are mission-driven non-profits. 

Charity rating systems do not currently provide sufficient analysis of nonprofits.  Some watchdogs are biased against large nonprofits which raise unusually high amounts of money; and others are biased against smaller nonprofits.  They put a lot of emphasis on financial statements and largely ignore an organization’s effectiveness and overall impact on the community.  However, how do you measure a nonprofit's ability to develop relationships, show kindness and a caring heart, and truly make a difference in the lives of others?   

Donors who want to know that the nonprofits they are giving to are truly effective, must take the time to check out the charities to which their heart responds.  Start rewarding charities that get results, and stop rewarding those which are not effective.  

Why Charity Research Matters.  The Federal Trade Commission accused 4 charities of misusing donations.  They have been accused of conning donors into a multi-million dollar scam.  Donors were told their contributions would go directly to cancer patients; but instead, of the $187 million raised, less than 3% went toward people fighting cancer.  The rest went to telemarketers, events and perks for employees and friends.  The FTC has banned the 4 charities from fundraising.  (Source: “Cancer Charity Scams,” CBS This Morning, May 20, 2015)
Additional Resources

Better Business Bureau
508 W. 6th Avenue, Suite 401
Spokane, WA  99204
(509) 455-4200 
The BBB is a private, nonprofit organization that provides services and programs to assist consumers and businesses.   The BBB provides reports on businesses and charities, complaint handling, mediation and arbitration with participating businesses.  In addition, the BBB offers consumer information brochures on a wide variety of subjects regarding marketplace issues.   Spokane’s Better Business Bureau serves Eastern Washington, North Idaho and Montana, and has nearly 130,000 companies in their database.

GuideStar is the world's largest source of information on nonprofit organizations  They are the search engine for nonprofit information. 

GuideStar gathers and disseminates information about every single IRS-registered nonprofit organization.  They provide as much information as they can about each nonprofit's mission, legitimacy, impact, reputation, finances, programs, transparency, governance, and so much more.  GuideStar collects, organizes, and presents the information you want in an easy-to-understand format while remaining neutral, so you can take the information and make the best decisions possible.

Charity Navigator
Charity Navigator was created as a free watchdog service to protect donors from unscrupulous practices.  This website is also considered to have the best known nonprofit rating system in the country, explaining how they spend their money.  Donations to many non-profits will increase or decrease, depending on their rating with this service; thus, nonprofits are motivated to keep their rating up. 

Charity Navigator also provides an additional measure of accountability, which measures transparency and anti-corruption controls within nonprofits.  Since implementing this program, many nonprofits have changed the way they do business. 

Inland Northwest Combined Federal Campaign  
The CFC lists the percentage of an organizations’ administrative and fundraising expenses. 

Internal Revenue Service
The IRS provides a list of organizations which qualify for a charitable deduction.  
View and look under “Search for Charities.” 

Value of Volunteering
In 2005, the total value of volunteer time in the U.S. was estimated at $280 billion. 

Washington Secretary of State
In Washington State, charities have to register with the Secretary of State. You can find out information about charities from the Washington Secretary of State website. (It has contact information for most of the registered charities and some financial information, such as the percent of expenses devoted to program services, for the larger charities.) Small charities (raising less than $25,000 per year from the public) and religious charities do not have to register.

Frequently Asked Questions about Charities: