July 30, 2014

How do you know if you're donating to a legitimate charity?

Dear Consumer Ed: 

A man with a bucket approached me at an intersection and said he was collecting money for his church.  I did not give him any money, but how do you know if someone is really representing a legitimate charity or organization?

Consumer Ed says: 

Unfortunately, there’s no clear way to determine if this was a legitimate charity or a scam designed to profit from your generosity.  When solicitations occur on the side of the road or in front of a supermarket, your ability to research and make an informed decision is extremely limited, but there are some things that you can do to evaluate their legitimacy.  

First, pay close attention to the name of the organization to ensure the person is not using a name that sounds like a popular reputable charity.  While a badge or t-shirt may make the solicitation seem authentic, these can often be of little help in determining the legitimacy of solicitations.  Ask the solicitor detailed questions about the organization’s mission, and what programs or activities the money will support.  If the person claims to be from a legitimate organization, call the charity (time permitting) to see if they’re aware of the solicitation and whether the person is authorized to use the name.  Finally, don’t give to representatives that resort to high pressure tactics to solicit your donation.  The decision to give should be truly voluntary and shouldn’t be dictated by this type of conduct. 

If you’d like to donate to a charity, the best method is to avoid solicitations and plan ahead by choosing a charity you want to support.  The first step in picking a charity is to ask for literature and information from organizations. This will help you evaluate not only the legitimacy of each charitable organization, but also its mission, ensuring it supports the causes important to you. Also, look at the organization’s web site and other resources to determine if it is an organization you feel comfortable supporting. 

Georgia charities are required to register with the Secretary of State. You can look up a charity’s registration by visiting sos.ga.gov, selecting “Securities,” and searching for the charity under the “Registered Charities Search.”

You should know that even properly established organizations spend varying amounts of their contributions on the actual programs they support. Organizations must pay for various administrative and labor costs associated with running a non-profit, and some are more efficient than others with your dollars.  Once you find out that a charity is a legitimate, there are several tools that will help you evaluate whether the organization will likely use your money effectively and efficiently:

  • charitynavigator.org - Evaluates charities based on financial health, transparency, accountability, and the percentages of spending going toward its particular program.
  • www.give.org - Better Business Bureau’s Wise Giving Alliance evaluates charitable organizations and has a National Charity Seal Program for participating charities.
  • www.guidestar.org - Provides information about charities’ legitimacy, impact, reputation, transparency, and finances and provides a rating out of five stars. 
  • www.charitywatch.org - Provides a list of the top rated charities as well as a letter grade based on the percentage spent on charitable purposes and the organization’s cost to raise $100.

Planning your donations ahead of time ensures your money is being used efficiently and that it is going to causes you want to support.  The most important thing to remember is to trust your instincts.  If you’re not confident in an organization’s ability to use your money effectively, choose a different organization to support.

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