When philanthropy goes wrong: fraudulent charities

With Fraud Prevention Month taking place through the month of March, MSU features blog posts from the front lines in the fight against fraud.

Business Counsellors at the Canadian Federation of Independent Business (CFIB) take tens of thousands of calls each year from small business owners, many of which relate to fraud attempts: phishing scams, telemarketing scams, credit card scams…the list is long and covers all aspects of business operations.

CFIB Business Counsellors are well-placed to understand what to look for so you can nip fraud in the bud before it hits your bottom line.

Follow My Startup throughout March and you’ll be wiser for it. Protection, awareness and intelligence can help keep your business safe from scams.

This blog takes a look at a particularly despicable type of fraud: scams that present as charities.

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hand-heartSmall business owners have some of the biggest hearts. It is good to support causes that you believe in and to which you want to give a helping hand. The problem is not everyone who has their hand out really needs a hand up.

Fraudulent charities are on the rise. Do you know if you are really supporting the causes that mean the most to you?  Ask yourself:

Is the charity who it claims to be?
Sadly, fraudulent charities use names that sound similar to legitimate charities. All registered Canadian charities are listed online in the CRA Charity Listing and are assigned a number that should appear on all official tax receipts.

Will your money get to where you want it to go?
Legitimate charities will provide you with an annual report with audited financials. This is important because some charities hire third-party telemarketing companies that keep a good portion of the donations.

A good rule of thumb for determining if your charity is getting its donations to the cause is to check how much of their donations go to administrative costs. Although there are different approaches and it’s not a perfect science, the percentage going to overhead costs should be less than 25%.

How much pressure is there to donate?
Do not let yourself be pressured into contributing on the spot. You have a right to say no. A legitimate organization will not pressure you to give immediately.

So who should I support?
A good practice may be to identify organizations you want to help before you are solicited for donations. Whether you have a personal interest or passion in a cause, or perhaps you choose to donate to only local causes, you always have options that address your specific needs.

Is money the best way to help?
As a small business, your money can help – but so can your time or services. Explore volunteer options that could help you connect with your community to show goodwill and help those in need.

Fraudsters prey on the goodness of people like you, but don’t let that stop you from supporting the causes that speak to your heart. Be aware of their fraud_logo_colortricks and ensure your gift is received by those that need it.

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Jocelyn


Jocelyn Rhindress is a Regional Team Leader of Business Resources for the Atlantic Region and has been with CFIB for over five years. She loves fighting for the good guys and has a passion for preventing fraud against small businesses.

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