Many businesses help their communities by donating to local charities. Although many nonprofits merit your support, some exist expressly to facilitate fraud. How do you avoid the latter? Before you give a check to a charity, learn about the deceptive tactics used by scammers and carefully screen it for credibility.
Branding Tricks
Fraudsters use a variety of tried-and-tested methods to mislead businesses into donating to false charities. One of the most effective ways they secure donations is by forming entities that imitate well-recognized nonprofits. They use familiar names and logos. They also make their websites and marketing materials look like those of the nonprofits they are mimicking.
These scammers frequently utilize bogus branding in emails and on social media platforms. Not only do they want you to donate money, but they also try to trick potential victims into clicking on websites that download malware. Fraudsters may employ malware to hack networks, steal data, and commit identity theft.
Common Scams
Other popular scams employed by con artists include:
Telemarketing scams. Scammers can use publicly available technology to spoof their phone numbers, making it appear that they are phoning from real charities. During conversations, they employ high-pressure techniques, giving potential donors little opportunity to vet their organizations. This strategy can be especially effective when a natural disaster occurs and potential donors recognize the need for immediate response.
Fake endorsements. Some scammers advertise “endorsements” from celebrities, major businesses, and community leaders to give fraudulent charity a sense of respectability and persuade people to donate. In most cases, the quoted individuals did not provide recommendations – or they were duped into lending their support. Perpetrators are increasingly using artificial intelligence to imitate well-known celebrities’ voices and appearances.
False invoices. Most businesses receive many invoices, and it is easy to overlook an invoice for a charity contribution you never made. To encourage timely payment, a phony charity’s invoice may include a note referring to a previous conversation in which you or another member of your company approved the donation.
The Real Deal
There are a few basic actions you can take to help ensure that your company’s charitable contributions are sent to legitimate nonprofits. Most states require reputable charities to register, and your state’s website should provide confirmation that a charity has filed and is in good standing. You can also use the IRS website to determine whether a charity is tax-exempt and whether donations to it are deductible.
Keep in mind that a fraudulent charity may supply you with the tax ID number of a legitimate organization. If you have any misgivings, investigate the person asking for donations. Charity Navigator, GuideStar, and BBB Wise Giving Alliance websites can include addresses, phone numbers, key performance indicators, tax and compliance information, and ratings relative to other nonprofit organizations.
Create and hand out a charitable donation policy as a best practice for protecting against fraud. Your policy should outline procedures for verifying a nonprofit’s legitimacy and authorizing donations in your company’s name. It should also indicate approved payment methods and provide guidelines for tracking and reporting any charitable contributions. Also, make sure you educate personnel on philanthropic scams and how to respond to unsolicited phone calls, messages, and emails. If they are unsure, employees should feel comfortable disregarding and deleting messages.
Importance of Philanthropy
Many corporations make donations to local charities to demonstrate their dedication to helping others. While there are many good nonprofits with important objectives, scammers frequently target altruistic businesses. Implementing a donation policy, screening charities, and training personnel on how to handle unsolicited requests can all help to ensure that your donations reach those in need.
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