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Japan's earthquake: How to avoid charity scams

Scammers abound after any disaster. Here's how to figure out which organizations are legitimate and best equipped to help.

By MSN Money Partner Mar 11, 2011 6:38PM

This post comes from Matt Brownell at partner site MainStreet.


In the wake of disasters like the earthquake and tsunami that just hit Japan, many people will reach for their checkbooks to contribute to charities assisting in the relief effort. But before you do, it's important to make sure you're not getting scammed into giving your money to the wrong people.


Sadly, some scammers will try to take advantage of tragedies by setting up fake charities and getting unsuspecting victims to donate to what they believe are relief efforts. And even some legitimate charities are nevertheless unworthy of your hard-earned dollars, either because they're ill-equipped to handle large disasters or because too much of their money is spent on overhead. Post continues after video.

So how can you avoid these scams and make sure your money goes to the people who really need it? "First and foremost, we always advise in these situations that donors avoid brand-new charities,” says Sandra Miniutti, spokesperson for the charity ratings site Charity Navigator.


She says the FBI tracked about 4,000 phony charity websites that cropped up in the wake of the Hurricane Katrina disaster, with some scammers launching their sites before the hurricane had even made landfall. As the body count rises in Japan, we can expect similar websites soliciting donations for what they claim are disaster relief efforts.


Legitimate but ill-equipped

That's not to say that every new charity that pops up in the coming days is going to be a scam. But Miniutti says that even legitimate funds  and charities that appear after a disaster may not be the best target for your dollars.


"Even groups with the best of intentions, there's no way they'll be effective," she says. "It's better to concentrate on ones that focus on the region, or have (experience with) relief and recovery." Her organization points to a few charities it considers particularly effective and well-equipped to handle disasters of this proportion, including AmeriCares, International Rescue Committee, Save the Children and the American Red Cross.


The good news is that it's easy to give to these and other charities, with many organizations allowing people to donate through social media websites or even by text message.


Texting isn't the fastest way to donate

But before you make a donation, Miniutti recommends taking an extra few minutes to verify that your money is going where you think it is. If you get an e-mail or see a Facebook post imploring you to text a mobile number to give to the Red Cross, for instance, check the organization's website first to confirm the veracity of the number.


And even if it is a legitimate number, the Better Business Bureau notes that text donations can take longer to arrive and may limit the amount you can donate, so giving directly through a website is probably your best bet.


Here are a few other tips for avoiding scams and getting your money to the best organizations:

  • Be wary of direct appeals. Charity Navigator recommends avoiding telemarketers claiming to represent a charity, and the Better Business Bureau says to ignore any e-mail from someone claiming to be a victim (unless, of course, it's someone you know in Japan). It also warns that e-mails that come with attachments could be just a way to deliver a virus to your computer.
  • Treat claims with skepticism. The BBB specifically singles out organizations that claim that 100% of all donations go to victims. Such a charity simply does not exist. While some organizations are more efficient than others, every organization has overhead costs relating to administration and advertising. Any charity that claims to give 100% of all donations directly to victims is either grossly exaggerating its effectiveness or isn't a charity at all.
  • Ask the right questions. The Federal Trade Commission, which investigates fraud, has a number of tips for doing your due diligence on a charity that asks for your money. In addition to asking what percentage of donations go to overhead, you should also ask whether the person soliciting the donation is a staffer or volunteer of the organization itself or a paid third-party fundraiser. If it's the latter, chances are that's going to further deduct from the final sum that winds up with the people who need it. 
  • Check credentials. If you're not sure whether a charity is legitimate, a good place to start is the Internal Revenue Service. Charities that want to receive tax-deductible donations have to be registered with the IRS, so the vast majority of legitimate charities can quickly be found on the agency's charity page. Of course, that doesn't tell you anything about their overhead costs or area of focus. For that information, we recommend checking out Charity Navigator or the Better Business Bureau's charity site.

Regardless of where you decide to donate, it's probably best to wait a bit before opening your purse strings. While it may be tough to stand by and do nothing while the tragedy unfolds, the fact is that most charities have yet to formally announce any action in the region. The International Rescue Committee, for instance, is on "standby alert," but notes that the Japanese government may not need a significant amount of assistance from international aid organizations.


Even once the country does open its doors to these organizations, it may take some time to determine where the area of the greatest need is. While many charitably minded people are chomping at the bit to help, it may be best to hold on to your money until it's clear where it can do the most good.


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