Guard yourself against sham charities

Story highlights

  • Money from a charity to help victims of Sandy Hook shooting has gone missing
  • Tre Hargett: Sham charities that exploit compassionate people are more common
  • He says Americans must do some research on charities before donating money
  • Hargett: Don't let your money fall into the wrong hands, and never give cash

The 2012 shooting at Sandy Hook Elementary School in Connecticut was tragic enough, but what has been playing out over the last few weeks has made the story even more stomach-wrenching.

More than half the money raised by the 26.4.26 Foundation, a Tennessee-based charity that ostensibly was established to help the shooting victims' families, has turned up missing along with one of the organization's co-founders.

As I write this column, law enforcement officials here in my state and elsewhere are trying to figure out why about $70,000 of the more than $100,000 raised by the group never made it to those families.

Unfortunately, this type of story has become far too common among charitable organizations. There are unscrupulous people in the world who try to exploit tragedies in order to enrich themselves. These people take advantage of the wonderful human trait of compassion for others. They undermine the most noble of selfless acts made on behalf of our brothers and sisters in need.

Tre Hargett

So while our generous response to tragic events such as floods, fires, earthquakes or horrific crimes is admirable, it needs to be tempered with a sense of caution.

When we spend our hard-earned money to buy goods or services, it is reasonable to compare prices and research product quality. We do this because we want to make wise purchasing decisions.

It is imperative that we apply the same logic to our charitable contributions.

In Tennessee, with a few exceptions, charitable organizations are required to register with the Secretary of State's Division of Charitable Solicitations and Gaming and file annual financial reports. Many other states have similar reporting requirements.

Would-be donors who take the time to review these reports can learn a lot about charities that are soliciting funds -- such as how much of their funds are used for administrative costs and other expenses and how much are used to actually provide services to the needy.

Of course, not all charities follow the law. The 26.4.26 Foundation didn't register in Tennessee.

If a charity hasn't registered in a state where it's required to do so, then that should raise a red flag for potential donors.

In addition to the information charities must provide to state governments, there are nonprofit organizations such as the Better Business Bureau, Charity Navigator, Charity Watch and GuideStar that can be useful resources.

Also, it helps to follow some basic rules before making a donation to a charity. Reputable charities shouldn't object if you want to do some research and send them a donation later.

Ask questions such as:

-- How will the money you donate be used?

-- How long has the charity been in operation? Where are its offices?

-- What types of programs and services would your donation help fund?

-- How much of the donation would be spent on the organization's administrative expenses and other costs?

-- Would a portion of the donation be kept by the solicitor as a fee?

If you get vague or unsatisfactory answers to those types of questions, you need to carefully consider whether your money might be better spent elsewhere.

Also, don't ever make cash contributions. It's much easier for cash to be misspent and it's more difficult for donors to claim cash contributions as deductions on their tax forms. When paying by check, make the check payable to the organization, not an individual. And only pay with a credit card if the organization is well established and highly trusted. Otherwise, you may be opening yourself up to the potential of identity theft.

When tragedy strikes, we should help victims as quickly as possible. However, by taking the time to do a little research before giving to a charity, donors could prevent their money from falling into the wrong hands.

And that, in turn, would help ensure that the truly needy get the aid and comfort they deserve.

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