Days after the deadliest mass shooting in the United States, the Internal Revenue Service (IRS) has issued a consumer alert about possible fake charity scams. The IRS notes that “[w]hile there has been an enormous wave of support across the country for the victims and families of Orlando, it is common for scam artists to take advantage of this generosity by impersonating charities to get money or private information from well-meaning taxpayers.” These schemes may involve contact by telephone, social media, e-mail or in-person solicitations claiming to be associated with charities assisting victims in Orlando.
Sadly, this isn’t new. You may remember a similar alert following flooding in South Carolina and heightened awareness following the Boston Marathon bombing. And earlier this year, a Tennessee man pleaded guilty to defrauding donors who contributed to an organization he founded to assist victims of the 2012 Sandy Hook Elementary School massacre.
So how do you protect yourself? The IRS warns that, when making donations to assist victims of last weekend’s terrible tragedy, there are simple steps taxpayers can take to ensure their hard-earned money goes to legitimate charities. The IRS encourages taxpayers to visit IRS.gov to find tools to quickly and easily check out the status of charitable organizations. Here are a few additional tips to keep in mind when helping out:
- Cash is king. While you may want to send medical supplies, flowers, and other items, the infrastructure may not support those donations. Don’t send non-cash donations without asking the organization first.
- Be smart. Be wary of personal solicitations on your doorstep or over the phone. Make sure that your gifts made by checks or credit card gifts are secure. If you don’t feel good about donating online, most organizations will accept checks by mail or over the phone. Don’t hand out your credit card or checking account information (or other personal information) to an organization that you haven’t verified.
- Do your homework. Check out the credentials of a potential donee/charitable organization before you make a donation. Charity Navigator is a great site to gather information about existing charities and it does have a specific section dedicated to Orlando (#LoveforOrlando). You can always confirm charitable status through the IRS website using the Select Check tool. Remember that some organizations (like churches) may not be listed, so ask the organization for more information if you’re not sure.
- Rely on oldies but goodies. There’s nothing wrong with new charitable organizations but there is something to be said for those that have been around for a while. The IRS encourages taxpayers to seek out recognized charities, and Charity Navigator warns to “[b]e careful about giving to brand new charities that spring into existence.”
- Listen to folks you trust. Let’s face it: you don’t always know who you are dealing with when you are friended on Facebook or followed on Twitter. But you do know to trust the helpers – remember Mr. Rogers? – and many of those have set up organizations to help.
- Remember the rules. The rules for charitable giving still apply even in situations that feel chaotic. That means that only contributions to qualified tax-exempt charitable organizations are deductible. Be sure to document your gifts and get receipts.
If you’re considering donating or reaching out in a more non-traditional way than writing a check, keep the following tips in mind:
- The IRS doesn’t offer tax-exempt status to organizations which are created for the benefit of an individual or a family. That doesn’t mean you can’t give anyway. If you want to support individuals, that’s fine. Just understand that donations are not deductible unless the recipient is a qualified charitable organization – individuals don’t count – and, of course, make sure that you understand where your dollars are going.
- Cards, notes, and flowers are great ways to say thanks to first responders – and those don’t have to be restricted to Orlando – but you can’t deduct the cost. If you want to maximize your efforts, consider a monetary donation in addition to a nice thank you gesture. Some volunteer first responder groups may be tax deductible; donations to government organizations are also deductible.
- Texting for the cause may be deductible. If your text donation benefits a qualified charity, like OneOrlando Fund announced by Orlando Mayor Buddy Dyer (text ORLANDO to 501501 to donate $10), it’s deductible. But as for checks and cash, keep good records to substantiate your gift.
- Pay attention to GoFundMe and similar accounts. Many are legitimate, like the one started by Equality Florida for the victims and their families (so far, they’ve raised nearly $5.5 million). However, sometimes, accounts are set up as part of a scam – like this one following an alleged incident at Kentucky Fried Chicken. GoFundMe doesn’t vet accounts and pages: that’s up to you. So be appropriately wary.
- That cool rainbow gear that’s been popping up? Folks have been encouraged to wear the rainbow to show support for the LGBT community. But even if you go out to buy it specifically for this purpose, it’s not deductible – even if the profits are being donated to qualified charitable organizations. It’s a great idea. Just not deductible. Go be fabulous anyway.
- Ditto for eating out for the cause. Restaurants and bars all over Orlando are hosting fundraisers to help. Having a beer or gobbling up a special dish with profits earmarked for charity is a fun (and delicious) way to help but not deductible.
- Finally, give blood. You can’t claim a tax deduction for giving blood but it’s an easy way to help. While the Red Cross has indicated that “blood needs from this tragedy have been met,” the organization also reminds donors that in “the event of an emergency, it’s the blood already on the shelves that can help save lives.” You can find your nearest donation center here.
For more tips on charitable giving, check out this prior post.
