Giving to charities has been a pillar of American philanthropy, supporting communities and causes all around the world. But the IRS now warns of a concerning trend: an increase in scams that use fake charitable contribution schemes to target taxpayers. These frauds harm taxpayers’ financial and legal status in addition to taking advantage of their goodwill. Here’s what you should know to stay safe.

The Anatomy of Charitable Contribution Scams

Scams involving charitable contributions usually involve people or groups posing as respectable charities to obtain money. They frequently appear after significant crises or natural catastrophes, especially during the holidays when people are more likely to donate.

Key tactics employed by scammers include:

• Impersonation of a real charity: To appear legitimate, scammers use names like those of well-known charities to fool taxpayers.

• Pressure tactics: This includes discouraging research and requesting quick funding, using time-sensitive pressure.

• Phishing emails and fake websites: Scammers pose as legitimate charities by sending phishing emails to obtain financial and personal data, and provide fake links.

How These Scams Harm Taxpayers

• Loss of Money: donations go to scammers, not legitimate charities.

• Identity Theft: Giving out personal information can result in the use of your identity without permission.

• Tax Implications: Requesting deductions for fake contributions may lead to audits, fines, and possibly legal action.

IRS Guidance to Avoid Falling Victim

Do your due diligence before making any charitable contributions. To make sure your donations are secure and significant, take the following actions:

• Verify the Charity:

Verify the charity’s tax-exempt status using the IRS’s Tax Exempt Organization Search Tool. https://apps.irs.gov/app/eos/
Seek out comprehensive details regarding the organization’s leadership, finances, and mission.

• Avoid Giving Under Pressure:

Avoid pushy requests or last-minute deadlines that make it difficult to confirm the charity’s validity.

• Inspect the Payment Method:

Choose payment methods that can be tracked, such as credit cards and/or checks.
Don’t make cash contributions without receipts.

• Review IRS Alerts:

Visit the IRS’s “Dirty Dozen” list of tax frauds, which includes bogus charity schemes, to stay up to date on the latest scams. https://www.irs.gov/newsroom/dirty-dozen

• Retain Documentation:

Ask for donation receipts. This guarantees accurate documentation and provides evidence in the event of a tax audit.

What to Do if You’ve Been Scammed

If you think you may have been a victim of a fraud involving charitable contributions, respond quickly:

• Report to the IRS: Submit Form 13909, “Tax-Exempt Organization Complaint (Referral)” to the IRS.

• File a Complaint: Contact the Federal Trade Commission (FTC) through their Complaint Assistant portal. https://reportfraud.ftc.gov

• Monitor Your Finances: Review your bank and credit card statements for unauthorized transactions.

Legal Recourse and Prevention

Retaining expert legal counsel is crucial for people or companies affected by dishonest charity schemes. At Strategy Law, we help clients with tax-related problems brought on by frauds, such as:

• Navigating IRS and FTB audits.

• Understanding deductions and compliance.

Conclusion

Giving to charities is a kind deed that can have a tremendous positive impact on your communities, but it is important to make sure your gifts have a beneficial effect on the charity and you while avoiding fraudulent schemes by remaining aware and watchful.

This blog is written as of February 2025.  Recommendations and legal requirements are changing rapidly, so please continue to review our legal updates or review postings on relevant government websites.

All blogs on this site are for educational purposes only, do not constitute legal advice or opinion, and should not be applied to your situation, or any specific situation, without consultation with counsel. Strategy Law, LLP does not provide any legal advice concerning any matter discussed in a blog except upon formal engagement including, without limitation, execution of Strategy Law, LLP’s formal legal services agreement, and with respect to specific factual situations.  No blog constitutes a guaranty, warranty, or prediction regarding the result of any legal matter discussed in the blog or any representation.