Leonard J. Hansen

Scams and Scalawags That plea for God or Good may enrich the wrong pocket

By Leonard J. Hansen

More money has probably been fraudulently collected in the name of God or Good than ever has been ever deposited on the Sunday collection plate at church. As a mature adult you are probably a softie when it comes to supporting religions and charitable causes, therefore you are the prime target for bleeding-heart pitches by scam merchants who operate by mail, telephone and the Internet. A 1999 state-by-state study coordinated by AARP showed that 24.8 percent of all by-mail pitches received by mature adults were for contributions. Many of the pitches could be considered fraudulent, while others seriously misrepresented the percentage of proceeds which would actually go to the claimed cause. Conservative estimates by the federal government put robbery by charitable fraud at $1.5 billion annually, while philanthropic watchdog organizations project $1.3 billion, in either case enriching a lot of scalawags. What the estimates do not include are the added billions from fund-raising campaigns run by both scammers and direct response companies which may take 85 percent or more of your contribution for their effort, remitting only a pittance to the cause. Grant that there are legitimate religious and charitable organizations which may do good and worthwhile work; but you are faced with the challenge of deciding which are honestly worthwhile and will receive the lion’s share of your hard-earned contribution. Within a day of a catastrophe anywhere in the world, fraud schemers are calling for funds to aid in the relief effort. There are bona fide, effective relief organizations - such as the American Red Cross and the Salvation Army - which do not use such fund-raising techniques. The boiler room operation of telephone pitch people yesterday may have been promising their marks (intended victims) a sweepstakes prize if they will just send the money for processing and shipping fees plus taxes, and today a mission of mercy to send medicines "to the victims...." The program may be a sham or, at best, one where a minuscule percentage of the cash take will go anywhere near the crisis. Other "charitable causes" may have names which sound very similar to legitimate organizations. Accept the legitimate names of the American Heart Association and the American Cancer Society and you’ll find literally hundreds of almost-similar names for very questionable and some fraudulent programs. Every day, millions of pleas for contributions are sent by "near name" organizations which claim to feed the hungry, bandage the wounded or save the world. And in a spirit of charity, not even thinking that they should question the program about its financial statements, dedication of funds to the beneficial program, or how much the marketing program is costing out of the proceeds, Americans, particularly mature adults, open their hearts and checkbooks, perhaps, to a scam. The methods of solicitation Originally, charitable contributions, even for a scam, were collected door-to-door, because both the legitimate and illegal programs have been around for more than a century. In early days, the hypster would don a Roman collar and go house-to-house soliciting "funds for a poor family a few blocks away." There was no poor family and all of the ill-taken loot afforded the scalawag with high class lifestyle in his other-than-faux-clerical time. Direct mail solicitations took over because of its mass reach efficiency, when thousand of pleas could be presented in a single day. These could be successful even with a two to five percent response rate. Direct mail may be considered expensive with the cost of a list, copy/creative, production, printing and postage coming to $500 to $800 per thousand for first class, $400 for non-profit mail rates – 40 to 80 cents for each delivered envelope. But the system is automatic and easy - send out the mailing and then open the envelopes which return with money. The higher marketing cost may mean, though, for both scams and legitimate operations, that most of the receipts will go to the cost of the solicitation with very little left to fund the intended cause. The key to real income comes to scalawags because they keep everything that arrives, from repeat mailings to "proven contributors" (or suckers), and from selling the list of proven contributors to other direct mail solicitors. DM Magazine, a leading direct marking trade publication, has reported actively on how legitimate charitable direct marketers produce significant income from selling their "proven contributor" lists. Therefore, as a person who has perhaps contributed to one direct mail solicitation, you can understand how you are now being flooded with other pleas for contributions. The opportunity of cyberspace has opened the floodgates of unsolicited real and scam - spam - pitches for charitable contributions, where solicitation costs are significantly reduced to mainly the cost of buying proven contributor or, in the case of scam pitches, to proven sucker lists. When you volunteer personal information to one of these pleas, you abandon your privacy to a database which can identify you, for which types of causes you are favorable, the size of contributions, bank account information and more. The target for charitable fraud pitches Willie Sutton is recognized as the most successful bank robber ever in the United States, selecting banks because "that’s where the money is." Today, FreeAgers, because you have amassed assets and discretionary spending ability, are the prime target for both legitimate and fraudulent pleas for contributions in the name of God or Good. If you buy into a charitable con game, know that many more pitches will follow. If you give money to even a legitimate operation with operating and marketing costs at or above 85 percent, you are enriching a boiler room or marketing machine and not benefitting the cause of your gift. How to know what is real for God or Good Before you agree to send a donation to any claimed charitable or religious plea, check it out. GuideStar.org, a web project of Philanthropic Research, Inc., lists 600,000 organizations which are recognized with the 501(c)(3) non-profit designation by the Internal Revenue Service. Just enter the organizational name and, if listed, you’ll have access to statements about the organization, if it has voluntarily provided its financial statements and IRS form 990, and other information. If the organization pitched to you is not listed, question whether it is, indeed, a legitimate non-profit organization. Access is cost-free at: http://www.guidestar.org You may also check the Better Business Bureau philanthropy program and the office of your state attorney general. Don’t be taken in the name of God or Good What to do when pitched for a contribution in the name of God or Good? Right away, ask if the caller is a paid telephone solicitor. Ask if the person is working as a staff member of the organization or is a direct marketing or other external venture. If the latter, know that the marketing and operation costs may be high. Ask for the complete name of the organization, telling the caller that you want to check it with your state attorney general’s office, the philanthropy unit of the Better Business Bureau and on-line at GuideStar.org, so before you make any decision, you want their information in writing. If a scam or a high-commission fund-raising operation, the caller will bail out quickly and your decision will be made very easy. Never agree to a high-pressure pitch for an immediate contribution; no real charity works in that way. Don’t agree to any charitable pitch on the first telephone call, direct mail or Internet solicitation. If I were to call you claiming to a be a lost cousin, in jail and desperately needing $500 for bail, would you sent it to me? I doubt it. Why believe the caller and alleged cause are who and what are claimed? Common sense demands knowing with whom you are really doing business; and you are not obliged to do or contribute anything. Period. If you agree to a contribution, never send cash or agree to have cash picked up by courier. Never give your credit card information in response to a mail, telephone or Internet charitable pitch. Never provide personal information such as marital status, your mother’s maiden name, income, home ownership or other which can be used by fraud operators to raid your bank or credit card accounts, or build a database on you for sale to other operators. Even legitimate charities build such databases and sell the information to other organizations because you are a proven contributor, ripe for other pitches for other charitable pitches. For God and Good There are fine charitable and religious organizations which may merit your consideration for contributions. You’ll have the money to help the good causes if you avoid enriching the scams or the promoters who will actually forward only pennies for each dollar you contribute. As in other consumer concerns and in all areas of fraud, you, the individual must be your own first line of defense. Take the steps recommended so you don’t make costly mistakes; then you’ll have more to give to give to the real and best causes and programs, even if that decision is to fund the next camp-out for a local boy scout or girl scout troop.