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How to make sure a loved one is supporting a legitimate cause

There are many reasons someone would want to make charitable giving part of their estate plan. Not only can it help reduce the tax burden, doing so can leave a positive, long-lasting impact on a community.

The unfortunate reality, however, is that there are some people who will try to take advantage of this kindness, exploiting it for their own gain.

The basics of charity fraud

The Internal Revenue Service (IRS) considers charity fraud one of its “dirty dozen” types of fraud for 2019. The goal of the perpetrator is simple – to siphon money or personal information from individuals by tricking them into giving to dishonest causes. The fraudster might go to the great lengths of setting up an actual organization, only to skim funds while barely offering up any donations. Or they may simply lie about the existence of a nonprofit and demand cash or information.

They may pitch any type of good cause. Fraudulent charities in the wake of natural disasters, for example, are quite prevalent, as are scams claiming to raise money for veterans. They also employ a number of tricks, such as:

  • Offering little (or vague) information
  • Pressuring someone to commit to giving right away
  • Sending a “thank you” note, despite the person never donating
  • Appealing to emotions first and foremost
  • Asking for cash, which has less of a paper trail

When it comes to legacy planning, this type of fraud can be devastating.

Charity scams often target older Americans

These con artists frequently target older Americans, believing they can capitalize on their victim’s desire to do good. In fact, the National Council on Aging charity fraud. If you are planning to give to charity, or if you know someone who is considering a donation, it’s important to keep an eye out for some of the red flags listed above.

You can also take some steps to help protect loved ones who might be targeted by scammers. Firstly, do some homework. Use Charity Navigator or the IRS’ tax-exempt list to look up the organization. If they don’t appear there, or have many negative reviews, that should be a red flag.

Similarly, be sure to verify the name of the charity in question. Some fraudsters create alleged charities with names very similar to well-known organizations as a way to confuse victims.

And lastly, talk to your loved ones about never offering their personal information, particularly sensitive items such as a Social Security Number. If a con artist gets hold of those types of things, they may use it in an identity theft scam.

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