Kentuckians generously donate their time and money to hundreds of deserving charitable organizations. However, some organizations use fraudulent and deceptive means when soliciting the public for contributions. If you choose to give, give wisely.
Every exempt charitable organization is classified by the Internal Revenue Service as either a "public charity" or a "private foundation".
Generally speaking, "public charity" funds are usually received by contributions from the general public, governmental agencies, corporations, private foundations or other public charities and the income raised is for the furtherance of the organization’s exempt purpose.
Organizations that are classified as "private foundations" usually have a single major source of funding and their primary activity includes the submission of grants to other charitable organizations and individuals rather than the direct operation of charitable programs.
Questions to ask when solicited by phone
Unless you are already familiar with and support an organization, do not promise you will contribute to its cause when you are called on the phone. Instead, ask:
- What is the full name, address and phone number of the charity?
- Do you work for the charity or are you a paid fund-raiser?
- For what purpose will my contribution be used?
- How much of my contribution will go to the charity?
- How much does the fundraiser get paid?
- Is my contribution tax deductible?
- Is the charity/professional solicitor registered with the Office of the Attorney General?
- What percentage of its total income does the charity spend on its charitable purpose?
Questions to ask when examining a written solicitation
- Is the full name, address and phone number disclosed in the material?
- For what purpose will my contribution be used?
- Does the organization offer to send me a copy of its financial statement?
- Is the charity registered with the Office of the Attorney General?
- Is the appeal for contributions written in a way that appeals only to my emotions rather than to my intellect?
- Does the appeal sound plausible?
Some charitable solicitations send messages or "red flags" which might lead a person to question whether this is an organization worthy of support or even whether it really is a charity:
- Did the organization refuse to send you written material or financial information?
- Did the person soliciting offer to send a courier to collect your contribution?
- Did the charity send you an invoice or statement which indicates a payment due for a contribution you never pledged?
- Does the organization's name and logo closely resemble another charity with a similar charitable purpose?
If the solicitor claims to be raising funds on behalf of a local charity, contact the charity yourself to verify that it is conducting a fundraising event. It is not uncommon for fraudulent solicitors to falsely associate themselves with local charities just to collect money and leave town.
What are coin boxes?
When you put a quarter in a charity's collection box or give a dime for a piece of candy in the name of a charitable organization you may assume that all, or most of your donation is going to the charity. That is not always the case.
Charities that rely on coin collection devices – cardboard stands, canisters, plastic containers, or gumball or candy machines - as a means of fund-raising may receive all the money that is collected, but sometimes the charity receives a flat, minimal monthly fee per device.
In most cases, charities that use cardboard stands and metal canisters perform all of the solicitation and collection work themselves or rely on community volunteers. Therefore, these campaigns are usually conducted for a nominal cost and usually under tight control procedures, which help ensure their success.
In other instances, the coin collection devices may be operated through a third party, rather than the charity itself. Independent businesspersons purchase the devices and then enter into contracts with designated charities whose names appear on the devices. The businessperson places the coin collection devices at various retail establishments and sends the charity a flat amount (perhaps a couple of dollars for each device per month) and keeps the remainder of any money collected as profit.
A similar situation can exist for some candy vending machines that include a charity's name on the machine. The charity may receive a flat fee per month or a predetermined percentage of the total money collected.
The Better Business Bureau offers the following points that consumers may wish to consider before donating their change to coin collection devices:
- Make sure the device clearly identifies the charity and lists an address or a telephone number that you could contact for more information.
- Be aware that there can be fund-raising costs associated with the various devices. Don't assume that all money collected will go to the charity.
- Make sure that the device is safely secured before making a donation that could end up in the hands of a thief.
Information on specific charities is available from the Better Business Bureau.
Donors have rights
Donors have the right to ask as many questions as necessary in order to make an informed decision. Donors have the right to ask what percentage of their donation will go to the charity, so it is important that you ask.
For more information
If you would like more information or would like to inquire about a charity or professional solicitor, you can view online records of active charitable campaigns being conducted or contact:
Office of the Attorney General
Office of Consumer Protection
1024 Capital Center Drive
Frankfort, KY 40601
The Better Business Bureau may also have additional information about a particular charity.
1-800-388-2222 (Louisville & Western Kentucky)
1-800-866-6668 (Lexington & Eastern Kentucky)