FTC Enlists GuideStar in Fight Against Charity Fraud

Release date: May 21, 2003
The Federal Trade Commission has engaged GuideStar, the premier source of nonprofit information, in a new initiative to combat fraudulent charities.

The FTC launched Operation Phoney Philanthropy, a law enforcement and public education campaign, on May 20. GuideStar joins the FTC, 34 states, and the Better Business Bureau's Wise Giving Alliance in helping donors recognize and avoid phony charities.

"By diverting donors' charitable dollars," asserted Howard Beales, director of the FTC's Bureau of Consumer Protection, "these scam artists undermine the public's confidence in legitimate charitable fundraising, and injure legitimate nonprofit organizations competing for charity dollars." The FTC recommends that before giving, donors verify a charity's legitimacy by researching it on GuideStar, www.guidestar.org.

"GuideStar is proud to be a donor's first line of defense against fraudulent charities," stated GuideStar president and CEO Robert G. Ottenhoff. "All of the nonprofits in our database are legitimate organizations recognized by the Internal Revenue Service. In addition, the information available on GuideStar enables donors to determine whether they want to support a particular charity."

GuideStar suggests the following steps for giving wisely:

  1. Verify an organization's charitable status.
    If a charity is not on GuideStar, ask to see its letter of determination or, if it is faith based, its official listing in a directory for its denomination.

  2. Get the cold, hard facts.
    A reputable organization will define its mission and programs clearly, have measurable goals, and use concrete criteria to describe its achievements.

  3. Avoid charities that won't share information.
    Ethical charities are willing to discuss their programs and finances.

  4. Avoid charities that pressure you.
    Reputable nonprofits don't use pressure tactics and are willing to provide literature or direct you to a Web site discussing their activities.

  5. Trust your instincts.
    If, after going through Steps 1-4, you still have doubts about a particular organization, don't contribute to it. Find another nonprofit that does the same kind of work and with which you feel comfortable, then make your donation.

About GuideStar

GuideStar, www.guidestar.org, offers information about the programs and finances of 1.7 million IRS-recognized charitable organizations. GuideStar powers many on-line giving systems and distributes both free and subscription-based nonprofit data to grantmakers, nonprofits, donors, government charity regulators, and professionals serving the sector. To find out more about GuideStar services, go to www.guidestar.org.

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Suzanne E. Coffman
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757-229-4631, ext. 27