Americans are very generous. When a hurricane, tornado, flood or other disaster occurs wallets, purses and checkbooks are opened to help fund humanitarian needs. Earlier this year The Giving Institute issued its report: Giving USA 2018: The Annual Report on Philanthropy for the Year 2017. (https://givingusa.org/giving-usa-2018-americans-gave-410-02-billion-to-charity-in-2017-crossing-the-400-billion-mark-for-the-first-time/). It showed that Americans donated over $410 billion in 2017 to charities and nonprofit organizations. That amount was 5.2% more than the previous year. As I write this two national lotteries have a combined jackpot of about $2 billion and that small amount (compared to charitable donations) is driving higher lottery ticket sales and breathless news reports.
Why am I mentioning charitable giving and lottery gambling in the same article? Whenever this much money is at stake unscrupulous people will find a way to benefit themselves. It is crucial to do your homework. For charitable contributions research the organizations that want your funds to be sure that they are legitimate and that a high percentage of the contributions go to the mission of the organization. For lotteries, understand the huge odds against your winning.
The FBI recently reported on one individual who created a fraudulent charity. Over 4 years he stole $668,000 in donations which he used for himself. Here is the story of Kai Brockington of Dallas Georgia. (https://www.fbi.gov/news/stories/bogus-charity-operator-sentenced-101918)
In 2012 he created “Our Genesis Project” as a non-profit organization that would provide health care to underprivileged children. He would ask individuals to tell their employers of donations that they had made to Our Genesis Project and request that their company make a matching contribution as well. Many large corporations maintain foundations to handle matching charitable donations from their employees but there seemed to be a lack of oversight in this case.
From 2013 through 2017 Brockington collected these matching contributions. According to the FBI none of the funds were spent for any charitable purpose. In some cases he would provide funds to employees of companies to use as the charitable “donation” which would then be matched or he would reimburse some employees for contributions. At least $250,000 of the funds Brockington received were used for trips to Italy and Disney World, trips to fancy restaurants and to purchase expensive clothing, shoes and jewelry. The rest went to home renovations and additions as well as vehicles.
In May 2018 he was sentenced to 41 months in prison on various charges as well as being required to make full restitution to his victims. He also filed false tax returns for which he owes back taxes and penalties. It is not clear if any of the employees of the companies who claimed to make a donation for a match may have committed a crime.
The moral of the story is to be sure to research any nonprofit that is soliciting funds for charitable purposes. Three organizations that research and rate non-profits and charities are Charity Navigator, Charity Watch and GuideStar. I list their websites in the Resources section of this website. These rate nonprofits in various ways and provide tips on ensuring you remain a wise supporter of your favorite charities. You can also check the tax-exempt status with the IRS’s Tax Exempt Organization site, also in the Resource section. Finally, each state has its own non-profit regulator and you can find yours at http://www.nasconet.org/resources/state-government/.
Stay generous but also give wisely….otherwise you might just be funding the lifestyle of a scammer.
If you or your company has been a victim of fraud let me know if you are willing to discuss it with me. It would be helpful to others to hear about real life examples of fraud, loss and recovery.
Let me know what you think………