Imagine getting a phone call asking you to donate money to a meaningful cause. Feeling generous, you agree to donate. Later, you find out you've been tricked. The caller was a paid professional fundraiser and most of your donation actually to their company, rather than the charity you wanted to support.
What Are Professional Fundraisers?
Some charities and nonprofit organizations use professional fundraisers to raise money. These charities often don't have the time or manpower to make phone calls, so hiring a professional can help. However, these professional fundraisers typically keep more than three-quarters of the money raised. Seventy-six cents on the dollar goes to the fundraiser and the rest goes to the charity.
Are There Rules Governing Professional Fundraisers?
While it's legal for professional fundraisers to call you, the law requires they be up front about being paid professionals. In New York, many callers weren't doing that, and ended up deceiving many donors.
Lawsuits against Professional Fundraisers?
The issue of professional fundraisers has been getting heat in New York and has become part of the state's ongoing initiative to fight fundraising scams. The state Attorney General Andrew Cuomo sued four professional fundraising companies, accusing them of lying, manipulating and deceiving to raise donations. The attorney general is trying to shut down these organizations after they broke state law by hiding their status as paid professionals.
The companies sued are Caring People Enterprises, Inc., Marketing Squad Inc., Stage Door Music Productions Inc., and Suffolk Productions Inc. Cuomo explained that in the last three years, these companies collectively reported raising $16 million and on average kept 76 per cent of the funds raised. Cuomo has also publicly reprimanded them for exploiting New Yorkers.
How Were These Companies Caught?
Professional fundraisers can be hard to catch. Undercover investigators got jobs with the companies and were trained to carry out deceptive practices and witnessed other workers making false statements to callers. The investigation showed that these fundraisers acted deceptively by:
- Using fake names and illegally failing to disclose to callers they were paid fundraisers
- Changing the names of charities to sound similar to well-known charities or causes
- Lying about the programs their clients actually provided
- Filing false annual documents with the state attorney general's office
How Can I Avoid This Fraud?
To avoid falling prey to these types of deceptive acts, here are a few tips:
- Donate only to recognized charities with a history
- Ask the caller the name of the organization she's calling from and whether she's calling on their behalf
- Ask the caller to point you to a web site for more information about the organization
- Look up the organization at the Better Business Bureau's Wise Giving Alliance, Charity Navigator, or the American Institute of Philanthropy
- Look closely at charities with names similar to well-known organizations, some organizations try to gain your trust by using names that sound like well-known charities
- Never pay the caller directly, only the charity itself through a web site or Paypal
- Avoid giving cash gifts. They can be lost or stolen. Don't do business with any charity offering to send a courier or overnight delivery service to collect your donation
- Get a receipt showing the amount of your contribution and stating it's tax deductible Be skeptical if someone thanks you for a pledge you don't remember making - this is a tactic many of these organizations use
- Reject high pressure appeals. Legitimate fund-raisers don't use these tactics or put you on the spot
- For those callers that use pleas, especially pleas involving patriotism and current events, make sure the organization has the ability to deliver the help it is claiming to provide
- After receiving a call asking for a donation, call the charity in question to find out whether it's aware of the solicitation and has authorized the use of its name
- With fire, police or military fundraisers, simply having those terms in the organization's name doesn't guarantee that police or firefighters are members and will benefit from the money raised. Call your local organization to verify
If you suspect that you may have been a victim of charitable solicitation fraud, you can contact the New York Attorney General's office at www.charitiesnys.com or by calling (212) 416-8402.
Questions for Your Attorney
- I think I was deceived by a professional fundraiser. Can I get my money back?
- I solicit donations for a charity. How can I protect myself if my colleagues take part in these deceptive practices?
- Are there times when my contribution isn't tax deductible?