The BBB Wise Giving Alliance, the national charity monitoring arm of the Better Business Bureau, is cautioning donors about potential red flags in fund-raising to help Newtown and to be aware of the different circumstances that often emerge in tragedy-related philanthropy.
The BBB urges donors to give generously but also give thoughtfully and avoid those seeking to take advantage of their generosity. With these tips:
• Thoughtful giving. Take the time to check out the charity to avoid wasting your generosity by donating to a questionable or poorly managed effort. The first request for a donation may not be the best choice. Be proactive and find trusted charities that are providing assistance.
• State government registration. Most states require charities to register with a state government agency (usually a division of the State Attorney General or Secretary of State’s office) before they solicit for charitable gifts. If the charity is not registered, that may be a significant red flag. Also, check to see if the local city or state agencies are endorsing specific charities to help in the aftermath of a tragedy.
• Respecting victims and their families. Organizations raising funds should get permission from the families to use either the names of the victims and/or any photographs of them. Some charities raising funds for the Colorado movie theater victims did not do this and were the subject of criticism from victims’ families.
• How will donations be used? Watch out for vague appeals that don’t identify the intended use of funds. For example, how will the donations help victims’ families? Also, unless told otherwise, donors will assume that funds collected quickly in the wake of a tragedy will be spent just as quickly. See if the appeal identifies when the collected funds will be used.
• What if a family sets up its own assistance fund? Some families may decide to set up their own assistance funds. Be mindful that such funds may not be set up as charities. Also, make sure that collected monies are received and administered by a third party such as a bank, CPA or civic club. This will help provide oversight and ensure the collected funds are used appropriately (paying for funeral costs, counseling and other tragedy-related needs.)
• Advocacy organizations. Tragedies that involve violent acts with firearms can also generate requests from a variety of advocacy organizations that address gun use. Donors can support these efforts as well but note that some of these advocacy groups are not tax exempt as charities. Also, watch out for newly created advocacy groups that will be difficult to check out.
• Online cautions. Never click on links to charities on unfamiliar Web sites or in texts or e-mails. These may take you to a lookalike Web site where you will be asked to provide personal financial information or to click on something that downloads harmful malware into your computer. Don’t assume that charity recommendations on Facebook, blogs or other social media have already been vetted.
• Financial transparency. After funds are raised for a tragedy, it is even more important for organizations to provide an accounting of how funds were spent. Transparent organizations will post this information on their Web sites so that anyone can find out and not have to wait until the audited financial statements are available sometime in the future.
• Newly-created or established organizations. This is a personal giving choice, but an established charity will more likely have the experience to quickly address the circumstances and have a track record that can be evaluated. A newly formed organization may be well-meaning but will be difficult to check out and may not be well managed.
• Tax deductibility. Not all organizations collecting funds to assist this tragedy are tax exempt as charities under section 501(c)(3) of the Internal Revenue Code. Donors can support these other entities but keep this in mind if they want to take a deduction for federal income tax purposes. In addition, contributions that are donor-restricted to help a specific individual/family are not deductible as charitable donations, even if the recipient organization is a charity.
It is unfortunate that we have to issue warnings of scam artists after such a tragic event but these individuals live by a different code and will not allow any news worthy event to stand in the way of separating you from your hard earned money.
Reach Kelvin Collins, the president/CEO of the Better Business Bureau of Central Georgia and the CSRA Inc., at (800) 763-4222 or www.bbb.org.