Nonprofits Beware! A Warning of Scams and Scammers

In the last couple of weeks, I have learned on Linked In about something that has been happening to colleges and charities that take online donations through their websites.  If your organization has this capability, I encourage you to continue reading.

What is happening is a four digit donation is made to an organization through its online donation portal.  The nonprofit sends an email gift acknowledgement using the contact information provided by the “donor.”  Shortly after sending the acknowledgement, the charity or college receives an email response stating that the gift had a mistake, and the “donor” wants a significant refund for the overage.  The email, written in irregular English, tells about a life changing event like the death of a spouse or a child, and then requests that the overage be paid to an account on a different credit or debit card, as the old card that was used for the “donation” has been canceled.  What these “donors” are attempting to do is to use the nonprofit as an unwitting accomplice to help them launder money gained through identity theft.  If you have a situation like this, do not comply with their request, but also do not think you can keep the donation, no matter how much you can use it.  It is not your money and it needs to be returned to its actual owner.  The Attorney General of Oregon gives some excellent advice what to do in this situation.

Obviously, I have a problem with criminals who try to take advantage of charities and nonprofits like this, but I have a bigger problem when I read stories of those who take advantage of kind hearted donors in times of disasters.  After Hurricane Sandy, unregistered “charities” sprouted up over night like mushrooms in a cow pasture, asking donors to financially support the victims.  In some cases, the money that was donated was then transferred to personal bank accounts.  Hours after the bombing in Boston, more than a dozen website domain names like “bostonmarathondonations.com” and “bostonmarathonvictimfund.com” were registered.  After the school shootings in Newtown, CT a pair of runners started the 26.4.26 Foundation to raise money for the victims’ community, and it has been recently discovered that one of the founders is missing along with over $70000 of the money raised.  Another woman in the Bronx, New York set up a website claiming to be a family member of one of the victims.  Fortunately, she was brought to justice and will be spending time in the custody of the authorities.  The people who do these kinds of things turn my stomach.

Sadly, I am sorry to say, there is a criminal element in our society that will try to make an easy buck dishonestly through fraud and deceit, but what really makes my blood boil is when I read stories on an almost weekly basis of charity leaders and employees who use their positions to pilfer money from their own organizations.  They use their positions to enrich themselves, taking advantage of lax fiscal oversight by weak Boards who are not trained to spot questionable expenditures.  Even when these crimes are uncovered, the organizations do not press criminal charges because they fear bad press that might damage the charity’s reputation.

In a previous post, Fiscal Oversight: The Importance of Annual Audits, I discussed this very issue.  Every time that one of these individuals gets caught, they have an excuse for their actions, or will try to justify their ethical lapse of judgement.  In my personal opinion, there is no excusing this behavior.

My candid advice to nonprofit organizations:  Be wary and and cover all your bases for the sake of your organization, your clients, and your reputations.  Pay attention to the monthly financial reports at Board meetings.  Have your finances audited by an independent accounting firm on an annual basis. If you find malfeasance, press charges and be transparent.

As many past and present politicians have learned, it’s not the mistakes you make that ruin you, it’s the cover-ups that do you in.

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About greatergoodfundraising

Richard Freedlund has been active in the nonprofit sector in a number of ways, both professionally and as a volunteer. He is the founder of Greater Good Fundraising, a business that helps schools and organizations raise money for their programs while accomplishing something positive for the community. After living in Oregon for 27 years, he has returned to his hometown of Rockford, Illinois and hopes to make his mark on the nonprofit sector there. He is the father of a talented jazz musician and the son of philanthropic parents that continue to support multiple causes. To contact Richard for consulting, fundraising, or speaking opportunities, email greatergoodfundraising@gmail.com or reach him on Twitter.com @ggfundraise
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2 Responses to Nonprofits Beware! A Warning of Scams and Scammers

  1. Sadly, while nonprofit organizations are working hard to do good, there are many who are working hard to do bad and enrich themselves with their criminal deeds. While we would like to be able to trust others, the reality is that vigilance is essential in order to protect our organizations and the public interest.

    One problem you touched on that can be a particular challenge is how a charity should handle funds received from a fraudulent donor. You mention that the charity cannot and should not use those funds. However, how does the charity appropriately return those funds? I’ve heard from some nonprofits that have tried, only to be frustrated in the process. Any thoughts on this?

    • Michael,
      Thank you for your thoughtful comments. In response to your question, I believe the organization should contact the bank which the original “donation” came from, and inform them of the situation. They should be able to return it to the cardholder and block any further transactions for their client.

      I am guessing these “donations” are coming from the accounts stolen from Target, Nieman Marcus, or any other business that had systems breached before the holiday season. Sadly, I think this is just the tip of the iceberg.

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