There are a lot of great non-profit organizations around. Nonprofits are important for standing for a cause, educating the public about the cause and, of course, raising money for a cause. Non-profits are a way for people to come together and give back to their communities through volunteering, raising awareness, and raising money.
Unfortunately, there are many cases in the United States where alleged charities are actually fake. The term for these fake organizations is charity fraud and is defined by Britanica as a “type of fraud that occurs when charitable organizations solicit funds in a deceptive manner or use the monies that they collect for purposes not intended by the donors…”
In this post, we will discuss the red flags of fraudulent charities and 3 ways for you to distinguish between a legitimate nonprofit and a fraudulent one.
The Red Flags of Fraudulent Charities
Before we get into the 3 ways to determine if a nonprofit is real or not, let’s take a look at some red flags of charity fraud.
One big red flag that a nonprofit is a scam is if they only accept certain payments. For example, some so-called nonprofits may only accept cash, wire transfers or gift cards as payment. This is not to say that real nonprofits don’t accept cash, but nonprofits that only accept cash or wire transfers are a red flag to charity fraud.
Another red flag of fraud is if the “nonprofit” puts a lot of pressure on you to make a donation. In this situation, these fake nonprofits will pressure you to give your donation immediately.
If a non-profit will not give you proof that your charitable contribution is tax deductible this is also a red flag.
There are other things to look out for when it comes to fraudulent nonprofits, but these are three of the major ones.
Now we will discuss the 3 ways to determine if a nonprofit is legitimate.
Legit nonprofits register with the IRS
Any legitimate charity will have an Employer Identification Number that is known by the IRS. If a nonprofit does not comply with the IRS it is most likely that that nonprofit is not being transparent. If you donate to an organization that is not registered with the IRS, you will not be eligible to get a tax deduction for your donation. The IRS has a tax exempt search tool that you can use on their website.
Charities must provide tax receipts
It is up to the donor whether or not they want to accept a tax receipt from a nonprofit, but nonprofits must provide the option for the donor. A nonprofit that accepts your donation without offering a tax receipt should be under your suspicion.
Check a database
You can also research a legitimate nonprofit through various databases. You can check the IRS website, the BBB Wise Giving Alliance, or any other reputable website to ensure that your charity of choice is indeed real.
Final Thoughts
Do not let the reality of fraudulent charities deter you from donating to a cause that you feel passionately about. It is important for people to give back and support causes that need your help. Just be sure that you do your research before donating to a nonprofit. Keep the information we have given you in this blog post in mind and you are sure to be a more savvy donor to your favorite cause. If you are interested in supporting the New Life K9 cause to donate service animals to veterans and first responders in need, please visit our How to Help page, where you will find many ways to give including donations and volunteering.
