Broker Check
Don't be Fooled by Charity Scams this Holiday Season

Don't be Fooled by Charity Scams this Holiday Season

December 02, 2023

The Internal Revenue Service is warning Americans to watch out for criminals who are posing as legitimate charities and soliciting donations. These criminals are taking advantage of people’s generosity in response to recent natural disasters and conflicts around the world and will only get worse as we are now in the holiday season.

“We all want to help innocent victims and their families,” IRS Commissioner Danny Werfel said in a press release. “Knowing we’re 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.” 

If you donate to these fake charities, not only will your money end up in the hands of criminals rather than organizations in need, but also you won’t be able to deduct your donations on your tax return, the IRS warns.

Here’s what you need to know to spot and avoid charity scams.

How Charity Scams Work

Criminals often use tragedies such as natural disasters and international crises to exploit people’s willingness to help. According to the IRS, they set up bogus charities and use emails, phone calls and fake websites to lure people into making donations. They also use social media sites and crowdfunding platforms to post pleas for contributions. 

When criminals reach out, they might claim to be with a known charity or use a name similar to that of a legitimate organization to establish trust. They are after money as well as personal information, which they can use to steal people’s identity and cause further financial damage.

If you get a request to make a donation in response to recent tragedies, be on the lookout for these scam red flags:

  • Pressure to make a donation: Scammers will claim that your donation is urgently needed and that you must send money right away.  
  • Emotional pleas with few details: Not only will scammers pressure you to act quickly, but also they make emotional pleas to persuade you to give. However, if the person calling can’t give you any specifics about how the money will be used, it’s likely a scam.
  • Requests to be paid in cash, cryptocurrency, gift card or a wire transfer: Scammers prefer these forms of payment because they’re harder to track.


How to Avoid Charity Scams

The IRS recommends taking the following steps to avoid becoming a victim of a charity scam.

Don’t give in to pressure

Scammers want you to respond emotionally, not rationally.  “Especially during these challenging times, don’t feel pressured to immediately give to a charity you’ve never heard of,” IRS Commissioner Werfel said. 

Instead, ask to be sent materials about the organization and to be given time to do your own research. If the person asking for money isn’t willing to do this, it’s a scam. Legitimate organizations won’t pressure you to make a donation on the spot.

Research before you give

If someone reaches out asking for a donation, ask for the exact name of the organization, its web address, mailing address and phone number. You also should ask whether your donation will be tax deductible and if the organization can prove its tax-exempt status by providing its Employer Identification Number.

Then you can confirm on your own whether the information you were given was correct. The IRS has a Tax-Exempt Organization Search (TEOS) tool you can use to verify whether the charity is legitimate and if it is eligible to receive tax-deductible charitable donations. You also can search for the organization’s name online along with the word “complaint,” “review” or “scam.”

Pay by credit card or check

Legitimate organizations won’t ask you to pay with a gift card, cryptocurrency or a wire transfer. Even paying with cash is a bad idea. Instead, pay by check or credit card so you have a record of your payment. 

Also, don’t click on links in unsolicited emails or text messages to make donations. These links could take you to fake sites that will steal your account and personal information or could install malware on your computer or mobile device. Instead, visit a charity’s website or call it directly to make a donation.

Don’t give out personal information

If asked, don’t provide personal information such as your Social Security number, date of birth or bank account information to anyone asking for donations. Even if the call, email or text appears to be from a legitimate organization, don’t give out this information.  

Document Your Donations

When you make a donation, ask for a receipt and keep it if you plan to itemize your tax return to claim a deduction for your donation. Even if you don’t plan to deduct your donation, keep proof of your donation in case you’re contacted by an organization claiming that you didn’t follow through on a donation pledge. 

Then, keep tabs on your checking or credit card account to make sure that you were only charged for the amount you agreed to donate and that you weren’t inadvertently signed up for recurring donations. 

Happy Holidays and stay safe. 

~Your friends at Purpose Planning

"IRS Warns of Charity Scams" Carefull. 2023