The No. 1 way to avoid scams when making charitable donations
You might be planning to donate to your favorite causes over the holidays, but scammers are also out in full force, setting up fake charities to take advantage of your generosity.
Knowing whether you're donating to a legitimate charity isn't easy, however. Scammers often use fake websites and emails with official-looking branding. Other times, they might use an altered caller ID to trick you into thinking they're calling from a real charity.
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With that in mind, the Internal Revenue Service has been reminding people about bogus charities and what you can do to avoid them. Here are a few tips.
How to know whether a charity is legitimate
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Before you donate, run the organization's name through the IRS' Tax Exempt Organization Search (TEOS) tool. The tool will confirm whether a charity is registered with the IRS and whether it's eligible to receive tax-deductible charitable contributions.
It's also smart to avoid charities that pressure you into making an immediate payment, the IRS says. Similarly, any nonprofit that insists on gift cards or wiring money for payment is a red flag since those forms of payments are less traceable and harder to reverse.
You can learn more about any organization by using watchdog sites such as Charity Navigator, CharityWatch, BBB Wise Giving Alliance and GreatNonprofits. These sites tell you more about a charity's governance and how it uses the funds it receives.
Money Report
Avoiding scams on crowdfunding sites such as GoFundMe can be trickier when it comes to local fundraising efforts for individuals or businesses, rather than a registered nonprofit.
Your safest bet is to only donate to a campaign organizer you know, the Federal Trade Commission says. The campaign should have a clearly defined goal and provide details about where your money is going. If anything is unclear about how the money will be spent, consider donating elsewhere, the FTC says.
If you think a charity is a scam, report it to the FTC at ReportFraud.ftc.gov. You can also contact your state charity regulator, which is listed on this National Association of State Charity Officials' webpage.
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