Stuffing Coal Into Scammers’ Stockings

Was Charles Dickens particularly ingenious when he came up with the legendary character Ebenezer Scrooge? Was Dr. Seuss at his creative best when he unveiled the Grinch? Did director Frank Capra and the others involved in assembling the classic film “It’s a Wonderful Life” experience a lightning bolt of inspiration when they dreamed up old man Potter, that conniving rotter?

The answer to all three questions is “no, ” topped by a holiday bow, emblazoned in wrappings of green and red and tied up with a festive ribbon.

No, to create all these immortal, household-name miserly holiday villains, all Dickens, Seuss, Capra and his writers had to do was be inspired by a breed of real people whose greatest joy is embarking on cash grabs through devious means.

This type appears annually around this time of year to appeal for holiday season and end-of-year charitable donations for the organizations they represent.

Folks from coast to coast, touched by emotional appeals at a time of holiday giving, dig deep in their pockets for donations to help less fortunate people, fund disaster relief, care for sick and injured animals and cure childhood cancer.

The only problem with these heart-tugging requests is the charitable organizations being touted are as fictional as the village of Pottersville. In many cases, they sound like real charitable organizations known to everyone. But they are in reality the creations of people intent not on assisting the less fortunate, but on lining their own pockets with as many free greenbacks as they can hoist.

Says Daniel Borochoff, president of Chicago-based CharityWatch, which rates and evaluates charities to help folks make more informed gifting decisions: “Just about anyone can set up a charity, implement a website and send out letters and solicitations that pull at the heartstrings. Some are quite expert at this. Many of them simply look at this as a business decision.”

Donor beware

Like most of us, you may see the holidays as a time of giving and want to assist less fortunate people with your charitable dollars. But as the description above suggests, if you want to make sure your gifts go to organizations that really help people, animals and causes, you must to do your homework.

After all, you research the best credit cards and best savings accounts. Why wouldn’t you also research the most efficient charities?

The fact so many fraudulent charity organizations exist is only part of the reason to do your due diligence before taking out your checkbook. Another is that a large percentage of donations to even some of the better-known legitimate charities wind up going not to those who can benefit, but to fundraising organizations and administrative staff that rake in the donations.

As Borochoff told me recently, big-hearted donors are often swayed by emotion and give to bad charities. That helps these organizations vacuum up billions of dollars, in turn giving rise to even more suspect charities. Still, it’s not easy for a donor to effectively investigate charities on her own. For instance, the financial reporting of a questionable charity may be handled in a way that makes it seem the charity is operating efficiently and puts donations to good use. But even though the organization is following generally accepted accounting principles, donations aren’t going to people in need.

Happily, CharityWatch, Glen Rock, N.J.-based Charity Navigator and Washington, D.C.-based GuideStar can help ensure worthy groups get donors’ gifts this season, and scam charities — deservedly — get lumps of coal.

Proactive, not reactive

The first and most important thing you can do to help make sure your cash gifts are put to good use is to stop being reactive, and start being proactive. “One of the big things is telemarketing appeals for charitable donations, ” says Sandra Miniutti, vice president of marketing for Charity Navigator.

“We tell people to simply hang up the phone. Even if there is a legitimate charity behind that call, they’re employing a for-profit telemarketing firm, and that firm may be taking 80, 90 or even 95 percent of your contribution.

“We’re trying to get donors to do is be proactive, not reactive. If you are proactive, you are less likely to be entrapped in a scam.”

(There’s another emerging reason to avoid telemarketing appeals, and that is “spoofing” technology, in which software is used by scammers to display the name of a legitimate charity on your caller ID as a way of stealing your cash.)

Miniutti advises flipping the process upside down. Instead of reacting to charities seeking your donations, proactively seek great charities doing the work you wish to support, whether they’re improving the environment, helping needy kids, paying for pets’ medical care or working to cure diseases.

At www.charitynavigator.org, you can search for charities and quickly determine how they rate on a zero- to four-star rating scale, Miniutti says.

At www.charitywatch.org, you can find top-rated charities in 36 different categories, including cancer, animals and the environment. And, Borochoff says, “In every major crisis we will post information about the best ways of helping people in that crisis.”

Finally,  www.guidestar.org gathers and disseminates information about every single IRS-registered non-profit organization.

By doing your part, you can aid a much larger effort. “The number of charities is increasing, [and] the level of donations is not keeping pace, ” Miniutti says. “So it’s critical we invest our donations into the charities that are high performing, so they’re not starved out of existence.”

That’s a sentiment even the Grinch would find hard to debate.