Tips & News

How Do I Know This Charity Isn’t a Fraud?

When you donate to a non-profit, you want some assurance that it isn’t a fraud. Here’s how to learn about where your money goes.

There are a number of ways to learn more about the legitimacy of the charity you’re about to support:

We all want to be as helpful as possible, but there are plenty of stories about charities that either spend more on lavish offices than they do on the people they’re supposed to help, or spring up after a natural disaster only to disappear as soon as the money is collected. How do you learn about these charities and get a more clear picture of their business practices?

The Federal Trade Commission’s “How to Donate Wisely” page

The FTC does a great job of keeping all kinds of businesses on the up-and-up. The Commission has a valuable search tool on its page “How to Donate Wisely and Avoid Charity Scams,” which provides advice on:

  • Researching the charity
  • Finding out how much money goes to the charity
  • Looking up ratings and reports
  • The FTC also provides timely news posts on charity fraud that relates to specific events. For example, charity scammers have been working overtime during the events around the coronavirus outbreak. Similarly, they seem to crop up when there’s any kind of natural disaster.
Use Charity Navigator to learn more about charitable organizations
Use Charity Navigator to learn more about charitable organizations

Charity Navigator

One of the FTC’s most important pieces of information is to use Charity Navigator to learn more about the organization that wants your money. It’s a good place to start, but not every public radio station is rated because many of these small, local organizations fall under Charity Navigator’s $1 million per year fundraising threshold.

Nevertheless, it still provides good information on the organizations that may be much more familiar to most people who are thinking about donating a car. Digging into the ratings of one of the more familiar car donation charities, the organization gets a two-star rating from Charity Navigator. But that’s only part of the story. They manage a two-star rating because it’s a combination of a four-star rating for “Transparency,” and a one-star rating for “Financials.”

Charity Navigator also provides historical ratings, which helps paint a picture of a charity over time.

Donate to Charities You Know and Trust

Both the FTC and the FBI suggest that donating to charities that you already know and trust is the best way to avoid charity fraud.

The Car Talk Vehicle Donation Program was developed -- and is still managed by -- the people who created the programs you listened to on NPR for the last 40 years. The Car Talk Vehicle Donation program was developed by Tom and Ray Magliozzi, and managed by the producers and staff at Car Talk, whose names you heard and laughed at at the end of every single program. The program was designed to give back to the hundreds of stations that carried Car Talk on a weekly basis.

The money that the Car Talk Vehicle Donation Program generates goes directly to the public radio station of your choice. While some vehicle donation programs struggle to send Charity Watch’s “reasonableness threshold” of 60 percent of the revenues generated to their respective recipients, the Car Talk Vehicle Donation Program pledges to send 70 percent directly to the stations it partners with.

FAQ:

Q: How do I know a charity is actually a non-profit organization? A: Along with sites like Charity Watch and Charity Navigator, you can go directly to the IRS and perform a Tax Exempt Organization Search.

Q: Who runs the Car Talk Vehicle Donation Program? A: This program is a legacy of the public radio show Car Talk. For more than three decades, Tom and Ray Magliozzi (aka Click and Clack, the Tappet Brothers) answered listeners’ questions about cars, and provided laughs, comfort, and trustworthy advice to millions. While Tom passed away in 2014, Ray and the rest of the staff decided to continue this program as a way to give back to the stations that were our friends and partners for decades–and whose programs we listen to every day.

Further Reading