The “Best of” Sirius XM Business Radio Powered by Wharton includes guidance on something that all donors care about- avoiding scams. In a recent episode featuring Chuck Harwood, Northwest Regional Director of the Federal Trade Commission, and our Executive Director Kat Rosqueta, Kat explained what donors can learn from the $187 million cancer charity fraud that made headlines this year.
“In this particular situation, you didn’t have to do much homework, actually, to see the warning signs,” she explained. “People should always remember that when they’re being asked to give, there’s a difference between a great and worthy cause and a great and worthy nonprofit organization. In this case, while the cause was certainly important, with the organization, a quick Google search would have surfaced some of the problems that have been there for a long time, including public journalists’ reports about concerns and the fact that they had already the lowest ratings on Charity Navigator, one of the watchdogs for nonprofits.”
Funders can conduct several levels of due diligence on organizations, Kat explained, which is becoming easier in this information-rich age. “Just because someone is asking you to support a worthy effort, doesn’t mean you can’t take some time to consider it, just like you would if someone was selling you an investment or a new product.”
5 tips for avoiding fraud:
- A simple Google search. If a nonprofit, its staff, or board have been the subject of negative press or an official investigation, that is a clear red flag to proceed with caution before committing funds.
- Leverage your friends and colleagues. One of the reasons that a cancer charity can generate so much goodwill is that many people have been affected by cancer. So, if you’re interested in supporting cancer charities in honor of friends and family who have been affected by cancer, ask those individuals, “Are there any nonprofit organizations who really helped you and your family?”
- Remember the difference between a worthy cause and worthy charity. Just because you want to support a great cause, it doesn’t mean that every charity addressing that cause is just as great.
- Take advantage of free, online information on nonprofits. GuideStar, Charity Navigator, & GiveWell all provide free information to donors on specific nonprofits that include financial information and programmatic information, and, in the case of Charity Navigator and GiveWell, their staff’s ratings of the nonprofit. The Center for High Impact Philanthropy’s own website also offers a wealth of information for donors seeking to maximize the impact of their giving.
- Get involved directly with an organization. By volunteering your time or speaking with staff and/or the people who benefit directly from the organization, funders get a first-hand look at how a nonprofit translates donor funds and other resources into programs that benefit clients.
“It’s a good lesson for everybody in making sure that we are smart about how and to whom we’re giving money,” Kat told listeners. “My hope -the silver lining of all of this- is that we have smarter donors going forward, and that those organizations that are doing the great work and are being transparent in how they’re doing that see more of the funds.”