On October 24, 2023, the Internal Revenue Service (IRS) issued a warning that donors should be aware of criminals who falsely pose as legitimate charities. These fake charities may scam good-hearted donors into making gifts that are for the purpose of helping those in need. However, these contributions to fake charities are not deductible on the donor’s tax returns.
IRS Commissioner Danny Werfel noted, “We all want to help innocent victims and their families. Knowing that we are trying to aid those who are suffering, criminals crawl out of the woodwork to prey on those most vulnerable – people who simply want to help. Especially during these challenging times, do not feel pressured to immediately give to a charity you have never heard of. Check out the charity first and confirm it is authentic.”
One benefit of working with The Community Foundation of Frederick County is that we do the work of vetting nonprofit organizations to ensure that they are in good standing before they receive a charitable gift.
The IRS also offers tools at IRS.gov to help donors gather information on legitimate charities. There is a helpful Tax-Exempt Organization Search (TEOS) tool. It shows the existence of the charity, notes that it is eligible to receive tax-deductible contributions and lists the tax-exempt status and filings. Not all eligible charities will appear in this tool, some religious organizations may not be searchable.
The Federal Bureau of Investigation also has resources on “Charity and Disaster Fraud.” This information also gives guidelines on protecting yourself.
Whenever there is an international crisis, such as a disaster or conflict, criminals take advantage of the generous spirit of Americans to create a bogus charity. Not only will they seek gifts, but they also ask for personal information that may assist them in identity theft.
These promoters will contact individuals using email or calls. They now are sufficiently sophisticated to “spoof” their caller ID to make it look like they represent a real charity. Many of the scammers target individuals who are seniors or have limited English proficiency.
You should be aware of strategies used by the fraudsters and scammers. They frequently will use names similar to legitimate charities. If an individual is uncertain about a call or email, he or she should ask the fundraiser for the exact charity name, website and mailing address. This information can be used to confirm that this is a legitimate nonprofit.
You should be cautious if you are asked for an immediate payment. Legitimate charities are willing to be patient and wait until the donor is prepared to make the gift. Scammers also will sometimes demand a large donation through a gift card or an immediate transfer by wire from a bank account.
Victims who make gifts to fraudulent charities do not qualify for an itemized charitable deduction. Only gifts to qualified tax-exempt nonprofits are qualified.
Americans are among the most generous people on the planet. Their desire to help may make them vulnerable to scammers. It is admirable to make generous gifts to charity, but donors need to be certain that those gifts go to legitimate organizations.
The team at The Community Foundation of Frederick County is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This article is provided for informational purposes only, it is not intended as legal, accounting, or financial planning advice.