Last year individual Americans generously gave more than $134 billion to charity, and in 1999 they'll likely top even that colossal sum. More than half will be donated this month, the traditional season for giving.
But before you reach for your checkbook or credit card, stop a moment to think. Are you sure you know exactly where your money is going and how it will be spent?
"Most charities in this country are super. They consider themselves stewards of your money, and they're going to spend it properly," says Daniel Langan of the National Charities Information Bureau (NCIB).
Nonetheless, the NCIB and other watchdogs advise caution this holiday season. Their buzz-phrase: "Give well, but give wisely." Why? Because consumers are often solicited by charities that are registered but questionablemaybe spending only a fraction of donations on the cause itselfand also by outright frauds.
Just listen to a con man, now in a Nevada prison for telephone charity fraud, describing to AARP's Anti-Telemarketing Fraud team some details of his former tricky trade:
"I'd ask for as much money as you have in your account. I've had some donations of $7,000 and only spent 45 minutes on the phone. I'd receive 35 percent," he admitted, adding with a trace of pride: "That's more than doctors make." The rest of the donationalong with 65 percent of all money solicited by his co-workers in the racketwent to their boss. Not a cent went to charity.
Vultures like these are experts at plumbing sympathies and undermining common sense. Their favorite bogus "pitches" are police and firefighters, children (anything from infant cancer to child abuse) and any disaster in the headlines. After the Oklahoma City bombing, they hit the phones the very next day, scavenging huge sums out of people's sense of horror and desire to help.
"They have no conscience," says John Bordenet, an AARP crime prevention expert. Once you've picked up the phone, "con artists 'keep the pigeon dancing'continuously talking to keep you on the line; putting you on the defensive; not accepting no for an answer; and giving you no time to reconsider." They'll urge you to pay instantly by credit card, or send a courier to pick up your check.
Recognizing these techniques as red alerts, Bordenet adds, is your best defense against telephone charity fraud. That and "ending the call quicklyeven while they're still talking."
What about legitimate organizations? The Internal Revenue Service classes some 690,000 as charities, covering the spectrum of causes. So there's a lot of competition for your money, and much variation in the ways they invite you to donate.
"Giving is an emotional and personal decision," says Bennett Weiner, head of the charities section of the Council of Better Business Bureaus. "And it's based solely on the appeal received by the individual." In other words, most Americans give not because of the worthiness of the cause or even for the tax break but because they react sympathetically when someone asks for money. "Unfortunately," he adds, "the vast majority of contributors give to organizations without checking them out."
WATCHDOGS AT WORK
It is not easy for the typical consumer to thoroughly investigate any particular charity. But watchdogs such as the CBBB, the NCIB and the American Institute of Philanthropy constantly evaluate the most asked-about national charities, using many criteria. They also set standards and publish lists of charities that do or do not meet them. The Internet and local consumer agencies are also useful resources. (See Charitable Giving Resources.)
One important yardstick is how much of your donation actually goes to the activities you want to support. Every group has to spend dollars to raise dollars, of course. Many charities, short on staff and equipment, employ professional fund-raisers, and there's nothing wrong in that.
But with no legal restraints on how much a fund-raiser takes off the top, some charities receive much less of your money than you might expect.
Of 79 commercial fund-raisers in Washington state, for example, only 20 (one-fourth) handed over more than 50 percent of donations to their charities this year; nine firms passed along less than a tenth. In 1998, Connecticut solicitors raised $8.9 million in donations, but the charities got only $2.9 million.
The NCIB and AIP recommend that no more than 35 percent of donations be spent on fund raising, with at least 60 percent directed to the charity's activities. (The CBBB, using different criteria, says at least 50 percent.)
The AIP extensively searches financial records to rate some 400 charities on a scale of A+ to F. On this basis, the National Childhood Cancer Foundation, for example, currently scores an A+ with 94 percent spent on its charitable services, whereas the National Cancer Center scores an F with only 5 percent spent that way.
The great majority pass this scrutiny. Overall, says AIP President Daniel Borochoff, "about 80 percent qualify as good charities in terms of financial performance."
Such information is one key to giving with confidence, but as consumers prepare to receive an avalanche of solicitations by phone or mail this holiday season, they should also be on their guard, experts say. Red flags to watch for:
- Vague descriptions of the charity's activities that emphasize the problem without explaining what the charity is doing about it. Look carefully at the wording: A solicitation may give the impression your money will go to medical research, for example, when in fact its program offers generalized health advice.
- Overly emotional appeals which, says Weiner, "make you cry instead of think, and might be a ruse to get you to give without checking them out further."
- Pressure, such as demanding an on-the-spot gift or pledge. No ethical charity will dun you for payment.
- Pledges you don't remember making. One scam is to send out pledge cards, in the hope that uncertain recipients will write a check anyway. (A pledge is not a bill.)
- The charity's name. Some less ethical groups choose names similar to those of well-known, blue-chip charities. The one soliciting you may not be the one you had in mind.
- Appeals for police or firefighters. Such causes are high on the list of most givers, an AARP survey shows, but they are also the most prone to telemarketing scams. To really help, give directly to a police or firefighting force in your neighborhood.
- Appeals after disasters. Phone solicitations for disaster relief are so often scams that it is best to give directly to a bona fide charity working at the scenefor example, the American Red Cross, Doctors Without Borders, Catholic Relief Services. After every major disaster, NCIB and AIP publish on the Web lists of appropriate charities helping relief work.
More generally, find out as much as you can about the charity that interests you. Don't give unless your questions are answered. But once satisfied that the charity is worthwhile, give as generously as you can.