We’re watching “Telemarketers” this month. The documentary series follows two former call center workers who discovered their employer was operating a huge scam. And the scam was even bigger than they could imagine. All three parts are available to stream on Max, with a subscription.
Charities often play on our emotions to solicit donations. They hope, with good reason, that emotional appeals will turn do-gooders with some spare cash into donors.
But even if you take emotion out of it, evaluating a charity can be tough. Doing “good” can be highly subjective, after all. There’s no universal, apples-to-apples way to track results. And without an accounting degree it’s tough to know how efficiently organizations are spending.
But there’s still a lot you can do to avoid scams and be a smart donor. We called up a few experts; here’s some of their best advice.
Be proactive.
Before you get asked to give money, reflect on what causes you care about, and what types of programs you want to support.
“Passive givers make a lot more mistakes than proactive givers,” said Laurie Styron, CEO of CharityWatch, an independent nonprofit watchdog that has ratings for more than 650 charities.
Styron also recommends setting a hard annual budget for donations. The constraint can help you focus your donations on fewer groups that you can vet properly.
CharityWatch publishes lists of top-rated charities, as does Charity Navigator, which also offers suggestions for charities responding to crises and disasters.
Know the basics.
Make sure you know the full and exact name of the charity. Sounds simple, but it’s easy to confuse charities that have lookalike names. Some less reputable charities will intentionally select names that are strikingly similar to larger nationally recognized ones.
Also, confirm the charity is a registered 501(c)3 nonprofit, which you can do with ProPublica’s Nonprofit Explorer tool.
Some organizations that sound like charities are actually political action committees. If your search with ProPublica’s tool yields no results, try Open Secrets, a nonpartisan nonprofit tracking money in politics.
Check the ratings.
CharityWatch, Charity Navigator, GuideStar, and Better Business Bureau assess charities based on their transparency, governance and fundraising efficiency — how much they spend to raise $1.
Some, like Charity Navigator, use automation to translate hundreds of thousands of tax returns into handy metrics. CharityWatch employs nonprofit accounting experts to review tax returns and financial statements in-depth. Because this process is much more labor intensive, CharityWatch only has ratings for a fraction of registered charities.
Take all ratings with a grain of salt. Each organization uses a different methodology to assess good governance and financial health. And sometimes the ratings of two organizations directly contradict each other. Independent researchers have found evidence that some charities have misreported expenses in order to boost their scores.
Any red flags?
Two key areas to check include evidence or allegations of fraud and conflicts of interest.
“Along with the ratings, we have something that we call alerts, which is basically when we become aware of known or accusations of fraudulent behavior,” said Michael Thatcher, president and CEO of Charity Navigator.
These alerts, which range from “review before proceeding” to “giving not recommended,” are based on reporting from news organizations and information from federal and state attorney general offices. But you can also search your local news sources to get a sense of a charity’s contributions to the community and whether or not it or its leaders have run into trouble in recent years.
Stryon also recommends that potential donors look at the board of directors, especially those for smaller, local charities, to see if there are any glaring conflicts of interest, like everyone on the board being family members. Board members should also have expertise that relates to the charity’s mission, she said.
Cut out the middleman.
Rather than donating through a telemarketer, go to the charity’s website. This will ensure more of your donation goes directly to the charity.
“It’s usually a lot cheaper to do it that way,” said Styron. “There’s really no need for you to put additional layers of administrative and fundraising costs between you and your donation.”
Protect your data.
Cutting out the middlemen will also protect you from more solicitations. Telemarketers often maintain donor lists they rent or sell to other groups.
“If you make a donation through one of these [professional fundraising campaigns], you’re on a list and that list gets rented out to other people,” said Brian Mittendorf, an accounting professor at Ohio State University. “You’re likely to get flooded with more requests.”
Many reputable charities have donor privacy policies posted on their websites, which explain what personal information the charity collects and stores on its donors and how it shares or rents that data to other organizations.
Support good causes, avoid bad charities.
Don’t confuse the cause and the charity. Styron said fundraisers will often employ “strawman” arguments to drum up donations.
“They’ll try to confuse you about the difference between something being a good cause versus a charity working in that cause being a good charity,” she said.
This can be more difficult to do in real time when a telemarketer calls. Sarah Kleiner, an independent research consultant who has previously reported on telemarketing scams, said there are a few questions potential donors should ask:
- Who do you work for?
- What is the name of the charity?
- What percentage of the money I donate will the charity get?
- How will the charity spend the money I donate?
Feeling pressured? Hang up.
If you feel pressured to give, slow the process down. Take some time to do your own research.
“If someone asks you for money, say, ‘Well, I’m not sure. Can you send me some information?’” said Kleiner.
“If they say, ‘No,’ or they say, ‘Sure, but I need your credit card information first,’ hang up the phone.”
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