Charity fraud
Encyclopedia
Charity fraud
is the act of using deception
to get money from people who believe they are making donations to charities. Often a person or a group of people will make material representations that they are a charity or part of a charity and ask prospective donors for contributions to the non-existent charity. Charity fraud not only includes fictitious charities but also deceitful business acts. Deceitful business acts include businesses accepting donations and not using the money for its intended purposes.
The Federal Bureau of Investigation’s (FBI’s) website is another source where preventatives of becoming a victim of charity fraud can be found. In their fraud alert after the Haiti earthquakes, there is a list of guidelines people should follow when making a donation.http://www.fbi.gov/pressrel/pressrel10/earthquake011310.htm
It is advised that people should not only follow certain guidelines when they donate but that they should also consult a list such as the on listed on the BBB’s website. This list includes the participants in the BBB Wise Giving Alliance's National Charity Seal Program. Participants in this program have met the Standards for Charity Accountability and may have, for a fee, display the seal logo on their websites as well as any other printed documents.http://www.bbb.org/charity-reviews/public/participants.asp
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
is the act of using deception
Deception
Deception, beguilement, deceit, bluff, mystification, bad faith, and subterfuge are acts to propagate beliefs that are not true, or not the whole truth . Deception can involve dissimulation, propaganda, and sleight of hand. It can employ distraction, camouflage or concealment...
to get money from people who believe they are making donations to charities. Often a person or a group of people will make material representations that they are a charity or part of a charity and ask prospective donors for contributions to the non-existent charity. Charity fraud not only includes fictitious charities but also deceitful business acts. Deceitful business acts include businesses accepting donations and not using the money for its intended purposes.
Examples
- On April 20, 1918, The New York Times published an article about a charity fraud committed by the Secretary of the Cripples’ Welfare Society, George W. Ryder. Ryder pleaded guilty to using mail fraud in order to use the donations for his personal gain.
- On December 19, 1985, The New York Times published an article about a former fundraiser at the New York City branch of the American Cancer Society. Miriam Grubard, 67, was the supervisor at the Cancer Society for approximately 23 years until her scheme was exposed. Mrs. Grubard would fraudulently collect donations, before the annual dinner-dance, from people who were promised that they would get their money back if they came to the dance. She also arranged for people at the dance to buy gambling chips with checks in exchange for merchandise or gift certificates for high-in retailers such as TiffanyTiffany & Co.Tiffany & Co. is an American jewelry and silverware company. As part of its branding, the company is strongly associated with its Tiffany Blue , which is a registered trademark.- History :...
, CartierCartier SACartier S.A., commonly known as Cartier , is a French luxury jeweler and watch manufacturer. The corporation carries the name of the Cartier family of jewellers whose control ended in 1964 and who were known for numerous pieces including the "Bestiary" , the diamond necklace created for Bhupinder...
and GucciGucciThe House of Gucci, better known simply as Gucci , is an Italian fashion and leather goods label, part of the Gucci Group, which is owned by French company PPR...
. Her scheme was executed in attempt to commit tax fraud. The scheme eventually was discovered and she was charged with 33 counts of filing false tax returns, which carries a fine of $3,000 to $100,000 as well as a three year sentence for each count.
- On November 13, 1992, The New York Times released an article about fraudulent solicitations supporting a cause. Often, beside the cash register in stores is a collection being taken up for a charity or for people in need. Although there are several real cases of people with ailments that need donations, there are several donations that are used as a marketing scam. In this specific case, the small-change donations were being kept by the vendors. The article states that the vendors paid a two dollar per month fee to use the charity’s name.
- On May 27, 2009, CNN reported the arrest and sentence of five leaders of one of the largest Muslim charities. These men were found guilty of using donations to aid a Palestinian militant organization labeled as terrorists by the United States.
Prevention
There are several controls as well as laws governing charities as well as businesses that accept donations. The Internal Revenue Service (IRS)http://www.irs.gov/charities/article/0,,id=169727,00.html, along with the Better Business Bureau (BBB)http://www.bbb.org/us/Charity-Standards/, has regulations in place that can be found on their websites.The Federal Bureau of Investigation’s (FBI’s) website is another source where preventatives of becoming a victim of charity fraud can be found. In their fraud alert after the Haiti earthquakes, there is a list of guidelines people should follow when making a donation.http://www.fbi.gov/pressrel/pressrel10/earthquake011310.htm
It is advised that people should not only follow certain guidelines when they donate but that they should also consult a list such as the on listed on the BBB’s website. This list includes the participants in the BBB Wise Giving Alliance's National Charity Seal Program. Participants in this program have met the Standards for Charity Accountability and may have, for a fee, display the seal logo on their websites as well as any other printed documents.http://www.bbb.org/charity-reviews/public/participants.asp
External links
- US: U.S.(FTC.gov) information regarding charity fraud
- US: Charity NavigatorCharity NavigatorCharity Navigator is an independent, non-profit organization that evaluates American charities. Its stated goal is "to advance a more efficient and responsive philanthropic marketplace by evaluating the financial health of America's largest charities."-About:...
's giving tips including the Top 10 Best Practices of Savvy Donors - US: The American Institute of PhilanthropyAmerican Institute of PhilanthropyThe American Institute of Philanthropy is a 501 nonprofit organization, created in the United States by Daniel Borochoff in 1992, to provide information about charities' financial efficiency, accountability, governance, and fundraising. Its official website is known as...
http://www.charitywatch.org/ and the Better Business BureauBetter Business BureauThe Better Business Bureau , founded in 1912, is a corporation consisting of several private business franchises of local BBB organizations based in the United States and Canada, which work through their parent corporation, the Council of Better Business Bureaus .The Better Business Bureau, through...
's Wise Giving Alliance can also be consulted.
- UK: use the Charity Commission to find out if the organisation you want to support is formally registered.
- Its Inquiry Reports list and give details on its latest investigations
- UK: Intelligent Giving gives an independent analysis of a charity's transparency for prospective donors(UK)
- Rumours about fraud and related activity are discussed in its Watchdog section
- Charity On Trial: What You Need To Know Before You Give by Doug White 1
- US: http://www.irs.gov/charities/article/0,,id=169727,00.html Life Cycle of an Exempt Organization
- US: http://www.bbb.org/us/Charity-Standards/ Standards for Charity Accountability
- US: http://www.fbi.gov/pressrel/pressrel10/earthquake011310.htm Haitian Earthquake Relief Fraud Alert
- US: http://www.bbb.org/charity-reviews/public/participants.asp National Charity Seal Program