Reduce the risk of fraud and help ensure your money is going to a deserving charity instead of a devious criminal by following these tips.
According to song, it’s the most wonderful time of the year. And, during the holidays, Americans annually open their hearts and wallets to help those who need it most. In fact, 30% of donations to nonprofits occur from about Thanksgiving until the end of the year.1
Unfortunately, fraudsters know this too.
So, each holiday season, they’re ready to swindle generous individuals with old tricks or new scams. Take your time, do your research and help ensure your donation is going where you intend.
Phony charities often insist you pay with cash, gift cards or prepaid cards. Using your credit card gives you an added layer of security because you can dispute the charges later with your credit card provider if you’re a fraud victim. Plus, using a credit card may make it easier to document your donation for tax purposes.
Criminals are crafty. They can push your emotional buttons with the finesse of a legitimate charity and create a false sense of urgency to give. But trust your instincts. Don’t feel guilty about pausing to assess the situation before handing over your money.
When donating online to a charity, make sure the URL of the site begins with https://. That “s” indicates it’s a secure, encrypted connection. Also, don’t rely on an unsecured, public Wi-Fi network to access the charity’s site, because your internet traffic may be intercepted by a cybercriminal.
Unfamiliar with a charity? Think before you give. It’s easy to research charities online in a few minutes. Sites such as CharityWatch, Charity Navigator, GuideStar and Better Business Bureau Wise Giving Alliance offer ratings about charities, as well as insight into how charities conduct their business and spend their donations.
Can’t find a charity listed? It could be a red flag. Use a search engine to research the charity. Try typing the organization’s name along with keywords such as “reviews,” “complaints,” “scams,” “consumer fraud” or “financial abuse” and see what pops up in the search results.
It’s the hectic holiday season. It’s hard to remember what you did today, let alone six weeks ago. So, it’s a good idea to record every donation you make during the holidays, including the date, charity’s name, donation amount and method of giving. Then review your financial statements later to confirm your donation was for the correct amount.
It’s also wise to make sure you haven’t inadvertently agreed to make recurring donations to the charity.
While you’re giving your money to charity because you feel it’s the right thing to do, there’s no harm in receiving a tax benefit in return. Use the Internal Revenue Service (IRS) Tax-Exempt Organization Search to determine if your contribution is tax deductible. You can also use this tool to help confirm the authenticity of a charity and reduce the threat of charity fraud.
For even greater security, think about opening a Donor Advised Fund (DAF) account. A DAF is an easy way to coordinate your philanthropic giving, and your DAF donations qualify for a tax deduction immediately at the time of the contribution. Plus, a DAF enables you to recommend how your money should be granted. Consult with your Morgan Stanley Financial Advisor for more information on the Morgan Stanley Donor Advised Fund, Morgan Stanley GIFT.