Guatemala Sinkhole and 10 Charity Rip-Offs

Last Updated Jun 1, 2010 2:24 PM EDT

Charitable appeals are likely to hit a fever pitch in light of the devastating storms that have already killed 150 and created a massive sink hole in Guatemala. But before you pull out your checkbook, make sure you know how much of your money is actually going to help people devastated by the storms and flooding -- or any other cause that triggers a charitable appeal.

With the National Oceanic and Atmospheric Administration predicting the worst hurricane season since Katrina destroyed New Orleans, there will undoubtedly be many people who need your help to cope with natural disasters. Don't let your charitable contributions go astray.

A disturbing recent analysis by Charity Navigator lists 10 non-profits that sound like they're doing good work -- helping veterans, children, police, firefighters and people with cancer, among others -- but are actually enriching their fundraisers far more than the groups they purport to help.

The Disabled Veterans Association, for example, will tell you that they need your donations of cash or lightly used household goods to help veterans start their own businesses or survive a short-term crisis. It sounds compelling. But this group ranks first on Charity Navigator's list of 10 charities that overpay their fundraisers.
In reality, less than a nickel of your donation will go to the veterans that you think you're supporting. An astounding 94.3% on the money you give to the Disabled Veterans Association will go directly into the pocket of the fundraising company making the phone call.

The Children's Charitable Foundation is almost as bad, paying fundraisers nearly 88 cents of your donated dollar. After administrative costs, only 10 cents of your donation will go to finance children's activities.

Natural disasters spur waves of requests for help from both legitimate charities, con artists and charities that are simply not worth your time and money.

If someone calls asking for a donation, ask them to put their request in writing and provide a "charity information card," which spells out how much of the proceeds of this fundraiser will go to the cause, how much will go to advertising and how much is spend on administration. Groups that spend more than half of your donation on fundraising clearly can't pretend that they're living up to their mission, according to the philanthropic ranking experts.

If the fundraiser refuses to send an information card, refuse to send a check. It's that simple.

If they give you guff, hang up -- or if you want to torture them a little -- look them up on Charity Navigator while you speak to them on the phone. (This approach has the added benefit of slowing the fundraiser down, which might just save some other hapless consumer from getting ripped off.)

There's a search bar at the top of Charity Navigator's home page, where you can type in the name of the charity and get a full report. These reports show what the charity does, how much it raises and how much of that money goes to programs versus fundraising and administration. Make sure you don't get fooled by a sound-alike charity. Ask the fundraiser to spell the name of their group and let you know where they're headquartered. You can then match that information to the listing on the Charity Navigator site. If they're a scam operation, there's a 50-50 chance that they'll hang up as soon as they realize you're checking them out.

Meanwhile, if you haven't already, consider investigating a charity or two that regularly assists when there's an international disaster, as well as one or two charities that you want to support on the home front. Then when there's a disaster, you won't be buffeted by potentially fraudulent appeals. You'll have a strategy for giving that allows you to know you're doing the most good possible with your donated dollar.

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Hurricane Season Starts Today: Could be Worst Since Katrina
Charities Fake Their Numbers to Look Good

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