Thursday, May 28, 2015

Fighting sham charities -- May 28, 2015 column


Outside the supermarket, a woman sitting at a card table says she is collecting food for needy families with children.

I don’t recognize the name of her group and she’s vague about where the food is going. But she’s friendly and seems sincere, so I buy an extra can of baked beans. More generous shoppers than I stuff dollars in her jar. I hope she’s on the level and go about my day.

How many times do we have such conflicting thoughts and emotions? At every turn, we’re asked to give. We know people are hurting, we want to help -- but we don’t want to be stupid. In my case, the financial risk was minuscule, but too many kind-hearted souls contribute real money to bogus charities.  

There must be a special circle of Hell for charity scammers who dupe unsuspecting donors. In this world, though, we rely on government to punish the wicked.  

In an unprecedented sign of nationwide resolve, all 50 states and the District of Columbia joined the Federal Trade Commission May 18 and accused four charities of fleecing more than $187 million from unsuspecting donors from 2008 to 2012. The charities, all with cancer in their names and run by family members, allegedly used almost none of the money they raised for cancer patients for patients.

The charities claimed donors’ contributions would “provide pain medication to children suffering from cancer, transport cancer patients to chemotherapy appointments, or pay for hospice care for cancer patients,” according to the complaint filed in federal court. “These were lies.”

None of the groups even had programs to provide pain medicine to patients. None transported patients to chemotherapy and none paid for hospice care.

Calling the groups “sham charities,” the complaint says almost every penny collected actually paid for-profit fundraisers and enriched the small group that ran the charities.

The funds donors intended for cancer patients instead bought cars, dainties from Victoria’s Secret, meals at Hooters, and “training trips” for employees and their families in Disney World and cruises of the Caribbean. Donations went for personal loans and paid for college tuition, gym memberships, Jet Ski outings, dating Website subscriptions and tickets to concerts and sporting events.

Less than 3 cents of every dollar collected went to cancer patients in cash and goods, the complaint states. “Comfort boxes” for patients included mostly overstock items, Carnation Instant Breakfast, Little Debbie Snack Cakes and later Moon Pies.

Under terms of a proposed settlement agreement, Children’s Cancer Fund of America and the Breast Cancer Society agreed to shut down, and three principals will be banned from fundraising and other charitable management activities. Litigation will continue against Cancer Fund of America, Cancer Support Services and founder and president, James Reynolds Sr., the FTC said.

It’s no easy task keeping track of charities. In 2012, there were about 1.6 million nonprofits registered with the Internal Revenue Service. Individuals gave roughly $240.6 billion to charities in 2013, according to Giving USA.

Almost every major disaster and tragedy generates a new wave of scam artists. State and federal regulators simply can’t keep up. 

In case you’re thinking that sham charities are a modern phenomenon, think again. Former President Grover Cleveland warned in 1906 that people might be discouraged from giving to responsible charities because of fraudulent schemes. He suggested the creation of an agency to test charities and provide “reliable guidance” to donors. 

Fortunately, today several organizations do just that, including the Better Business Bureau Wise Giving Alliance, Charity Navigator, Charity Watch and GuideStar. The FTC has good advice on its Charity Scams page.

Consumers should know that many sham charities have names strikingly similar to reputable ones. Beware of appeals that tug at heartstrings with diseases like cancer and the suffering of children, police, firefighters and veterans. Ask questions; legitimate groups should provide information on how they spend donations.

And I learned this: “Wise donors don’t drop money into canisters at the checkout counter or hand over cash to solicitors outside the supermarket,” Charity Navigator advises in Top 10 Best Practices of Savvy Donors.

We all have a role to play in stopping sham charities. Now more than ever, it’s important to be generous -- and smart.

©2015 Marsha Mercer. All rights reserved.


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