Charitable Giving and Financial Fraud
Most of us think about charitable giving around tax time; however, charitable giving continues all year long. The thought that we could be in need one day, just as the people we are helping, is a huge motivator for some. Others feel that it is their “duty” as Americans to help their fellow citizens while others simply see it as the “right” thing to do. In times of devastation or tragedy, Americans have always been very generous with their charitable giving. Whether it is because of a person’s faith, civic duty or sympathetic nature, most Americans gladly share their hard-earned income with others in need.
Unfortunately, there are thieves who take advantage of the good nature others. When we make charitable contributions, we must be very careful to protect ourselves from financial fraud. It hurts to think that a person would take advantage of our kind and giving nature; however, it happens every day throughout the United States.
How to Identify and Prevent Fraud
We are all susceptible to fraud. Some people may think that they are too “smart” or “savvy” to be taken in by fraud and that only happens to the elderly or someone not managing their finances wisely. The truth is that anyone can be a victim of fraud if that person does not take the time necessary to investigate a charity prior to giving money to it. For example, whenever there is a devastating event such as a hurricane, typhoon or tsunami, thousands of website pop up overnight claiming to support the victims. It is easy to mistake these websites as genuine organizations because the creators of these fraudulent websites are very good at making their website appear legitimate. They work very hard to deceive the public. You believe that you money is actually going to the people who need help; however, the money is going in the pockets of thieves.
This brings up another issue with many of these online charity groups. How much of your money is being used for aid? Many of these groups have high overhead costs. Rather than using the money to purchase food, goods and services for people in need, the administrators label funds as “program costs” and pocket the money. Even websites and fundraisers supported by celebrities are plagued with the problem of high operating expenses that prevent donations from being used for their intended purpose of helping those in need.
Emails are another way thieves target people. By now, most people have received an email from the Nigerian prince stating he has money waiting to be claimed. Some people may have received an email from a person in another country who has inherited a large sum of money but they need help transferring that money to the United States. One variation includes a woman who needs to leave her fortune to someone because she has no heirs and she is dying of cancer. One scenario involves an American soldier who needs someone to receive and hold his wages while he is serving overseas. There are numerous variations of the scam email, including those asking for donations to help those in need.
The common theme is that all of these emails ask for your personal information such as your bank account number, social security number, address, birthdate, etc. You can sometimes recognize these phishing emails because they appear to have been written by someone who does not have a good grasp on the English language. The best advice you can take away from this discussion is that if you do not recognize or know the sender of an email, do not open or save any attachments to the email. The sender has attached a virus that infects your computer as soon as you open the attachment. The virus is designed to allow the sender to have access to your personal information. Some attachments are designed to access your email address book so that the sender can forward an email to you that appear to be from someone you know claiming he or she is in trouble and needs money immediately.
Tips for Avoiding Fraud
• Do not give to people who contact you by telephone or come to your door. Most of these people take most of the money for themselves and it is almost impossible to verify if they represent a legitimate charity organization.
• You may want to give to the homeless but many people on the street are scam artists. To help the homeless, give to local organizations that provide aid to the homeless in your area.
• Give to local charitable organizations where the money stays in your community. Donate your time in addition to your money so you can get to know the people who operate your local charity organizations.
• In the aftermath of a natural disaster, many churches collect donations that are sent to churches in the affected area. Churches working with other churches can often get aid to the people who really need it.
• Research charities before you give your donation. A popular site for researching charities is Charity Navigator. This is a good organization that does the homework for you by vetting charities and analyzing how much of your actual donation goes to overhead and how much goes to aiding the people in need.
• When donating large sums of money, contact an attorney to discuss forming a trust to structure your charitable donation to avoid fraud.
• Discuss the issue of fraud with your elderly relatives to help them understand the danger. Consider adding yourself as a second signature on their checking account so that every check written requires two signatures.
For more information contact our office to schedule a consultation with the attorneys at Krause Donovan Estate Law Partners, LLC. Their experience and knowledge can help you have the peace of mind of knowing that you have a plan. Contact Attorney Daniel J. Krause or Nelson W. Donovan today.
Reach us through our website or call our office at (608) 292-5185 to schedule your confidential, no obligation initial consultation