An Angus Reid survey commissioned by Capital One and CanadaHelps shows 65% of Canadians are worried about fraudulent charities, a 14% jump from the results of a 2009 survey.
This skepticism, combined with the difficulty of recovering donations made to fraudulent charities, led 53% of respondents to say they are less likely to give to charity. A strong majority—61%—report heightened concerns about charity fraud following major natural disasters.
The poll results also found that 41% do not take simple steps to verify that a charity is registered, ask the person soliciting donations for identification, or visit the charity’s website before making a donation. Most will make their decision, the data shows, based on the charity’s reputation or past experience with it. Fifty-two percent of Canadians say they wouldn’t know where to turn if their donation did not go towards a legitimate cause.
The Angus Reid survey also shows that 22% of Canadians prefer to make their donations online, an 8% hike from the results of a similar 2009 survey. Younger Canadians seem to be behind the shift: 31% of those aged 18-34 say they prefer to make online donations.
“With more and more Canadians preferring to donate online, it is increasingly important for credit card users to understand what to look for to ensure they are donating through a legitimate and secure website,” said Capital One Canada spokesperson Laurel Ostfield.
Buyer beware
“There are a lot of fraudulent charities that seem to dwell on children,” says Blair Corkum of Corkum & Arsenault Chartered Accountants & Financial Advisors. “They’re trying to mimic ChildFind, for example, and people tend to be quite compassionate for children, so they make donations.”
The elderly and people who don’t take the time to question the credentials of the charity are most vulnerable to fraud, Corkum notes, adding that in many cases those soliciting funds will have the skills of shark-like salesmen—someone with their guard down may find it hard to say no.
“It’s really a ‘buyer beware’ type of situation. If you mail out 5,000 Nigerian bank scam emails, somebody along the way is going to be enough of a sucker to fall for it. And I would think the charity scams would be more successful because they’re playing on people’s compassion in one way or another.”
Corkum relates a local anecdote that, while amusing and relatively harmless, illustrates how easy it can be to concoct a fraudulent charity scheme:
“The doorbell rang at this family’s house and there were two young boys there wearing hockey sweaters, collecting money for their hockey team to go on a trip. So mom answers the door and the two boys make their request, and mom turns around and says, ‘John, you didn’t tell me your team was raising money to go away.'”
John, it turns out, was the boys’ hockey coach. Needless to say there was no trip on the team’s schedule.
Unfortunately, not all charity fraud is so benign in consequence. Corkum says he keeps tabs on charitable registration revocations, and has observed a number of charities have lost their status because they were involved in—if not established for the purpose of—financing terrorist organizations.
This past summer, for example, the CRA revoked the charitable registration of the Sri Lankan Tamil Refugee-Aid Society of Ottawa for funneling over $700,000 to the Liberation Tigers of Tamil Eelam. Only a few years ago a much larger case was concluded south of the border: the Texas-based Holy Land Foundation for Relief and Development was prosecuted for funneling some $12 million dollars to the terrorist organization Hamas. The case also revealed a chilling blueprint penned by the Muslim Brotherhood—much in the news of late with the turmoil in Egypt—for extensive influence operations in both the United States and Canada.
Revocations will often happen for far less troubling reasons, Corkum says. A genuinely worthwhile and well-intentioned local charity may, for example, fail to stay on top of the paperwork required to maintain their status, and lose their registration as a result.
Corkum insists there’s no excuse for eligible charities not to be registered. “I’ve obtained registered charity status for charities in the past and I’ve not found it to be difficult. There are these horror stories out there about how difficult it is, and I just don’t know where they come from,” he says.
Fortunately, donors who contribute to registered charities that lose their registered status between the time the donation is made and the time they file their taxes are still able to claim their tax credit.