use a wide variety of methods to solicit charitable donations. New and powerful
technologies utilize not just the internet and email, but also social media and
mobile phones. Today, a volunteer can create a fundraising page and start
soliciting on behalf of a charity in minutes. So, too, can a fraudster. To help
charities and fundraising platforms understand their rights and obligations in
this rapidly evolving fundraising environment, and to help donors make wise
giving decisions, the Colorado Secretary of State’s Office offers the following
fundraising can be conducted online in numerous ways: a charity can conduct a
fundraising campaign through its website, social media pages, emails, or it can
use a third-party fundraising platform to crowdfund a specific project or
campaign; a charity’s supporters can fundraise through emails, social media, or
by initiating a peer-to-peer fundraising campaign through a fundraising
platform; or donors can search for charities pre-listed on fundraising
platforms and make a donation without the involvement of the charity.
No matter how charitable dollars are
raised online, charities should keep these tips in mind:
Protect your brand! Defend your charity’s reputation, brand,
and fundraising strategy.
Your charity has the right to control the use
of its name and brand. Your charity may want to establish a policy as to
who can fundraise on its behalf and the process to receive authorization.
In Colorado and most other states, an individual
supporter must get written consent from a charity before using the
charity’s name when fundraising. If your charity gives consent, follow up
with the supporter to verify that your charity received all donations.
Research your charity’s online fundraising
presence. It may be more extensive than you know:
Third-party fundraising platform
websites provide charities an opportunity to connect with donors and fundraise
online, and allow individual supporters to raise funds for their favorite
causes through peer-to-peer fundraising.
Some fundraising platforms acquire a
database of all tax-exempt charities and allow supporters to initiate
peer-to-peer fundraising, even without the charities’ knowledge. Find out who
is fundraising for your charity and what information and representations they
are making on your behalf.
If your charity wants to receive funds
from a fundraising platform that has your charity pre-listed in its database,
contact the fundraising platform and claim ownership of your charity’s presence
on that website, so the site has the correct contact and bank account
If your charity does not want to be
associated with a fundraising platform, contact them to request that they
remove your charity from the website.
When deciding to use a fundraising
platform website, a charity should research the following issues:
What fees will the website deduct from
Will a charity be provided with its
When will contributions be deposited
into a charity’s bank account or mailed to the charity? The Colorado Charitable
Solicitations Act requires funds to be deposited in the charity’s bank account
within two business days.
What happens to contributions that
don’t meet a certain threshold amount?
What steps are being taken by the
website to prevent solicitation fraud?
What kind of accounting will the
website provide to a charity? If questions arise, what procedures are available
for the charity to challenge the accounting?
Contact the fundraising platform and the
Colorado Secretary of State’s Office, if you suspect any solicitation
following these tips, your charity can raise funds smartly and safely online.
Online fundraising allows donors to
give to numerous causes with the click of a button. To help make an informed
decision on how to donate online, donors should be aware of the following:
sure you are donating to a legitimate charity
If you receive an email or text message
asking for a donation, confirm that the request is from the charity, and not an
imposter, by contacting the charity or visiting its website.
Be cautious of “look-alike” websites. These
fraudulent websites will often ask for personal financial information or may
download harmful malware into your computer.
Watch out for charities with names that
sound similar to well-known organizations. Sometimes these sound-alike names
are simply intended to confuse donors.
Don’t assume that charity recommendations
on Facebook, blogs, or other social media have already been vetted. Research
the charity yourself.
Individual supporters, like yourself,
can raise money for charities through peer-to-peer fundraising campaigns. Supporters
can set up fundraising pages on fundraising platform websites to raise money
from friends and family members for their favorite cause.
If you want to set up a peer-to-peer
fundraising page, please contact the charity beforehand to get permission to
use its name and to make sure the representations you make on your page are
If you want to make a donation on a
peer-to-peer fundraising page, first make sure that your donation is going
directly to the charity and not the individual supporter.
Find out what percentage of your
donation will go to the charity and whether you will be charged any fees for
making a donation through the fundraising platform website.
Find out what the website will do (if
anything) with your personal information; be wary of websites that do not
Be cautious when considering giving to
newly formed charities since they won’t have a track record that you can take
Be extra vigilant when donating online
in the wake of natural disasters or national tragedies.
Some charities are formed shortly after
these events and may have the best of intentions; however, an existing charity
is more likely to have the sound management and experience to quickly respond
to these situations, and it will have a track record, which you can
Be aware of sham charities that pop up
to take advantage of people’s generosity during these times.
You may want to give to a specific
program or purpose within a charity; for example, disaster relief. If a website
has a “donate” button, see whether you can designate a specific purpose for
your donation. If you can’t, contact the charity to be sure your donation will
be spent for the purposes you intend.
Some charities sell merchandise online
and claim that “100% of the proceeds” will benefit the charitable purpose. But
“100% of the proceeds” does not necessarily mean 100% of the sales price. Contact
the charity to ask how much of each purchase it will receive. If they cannot
give you an answer, consider donating another way.
Gifts to an Individual or Family
Contributions earmarked for relief of a
particular individual or family are not tax deductible, even if they are made
to a qualified charitable organization. Ask whether the charitable contribution
is tax deductible, and verify with your tax advisor or the IRS. The fact that a
charity has a tax identification number does not necessarily mean your
contribution is tax deductible. Ask for a receipt showing the amount of the
contribution and stating that it is tax deductible.
Ask the fundraiser whether there is a
trust or deposit account established for the individual’s or family’s benefit. Contact
the banking institution to verify the existence of the account, and check
locally to confirm that there really is such a need.
Do not give cash. Contribute by check
that is payable to the fund, not to an individual, and mail directly to the
If you wish to establish a fund to
assist victims of a tragedy, be especially careful to respect the wishes of the
victim’s family and friends. The law requires that you have written permission
to use the names or photographs of any person or organization in your
fundraising appeals and you may also have to register with your state charity
regulator before any solicitations occur. Be specific and transparent about how
the funds will help victims or their families and how quickly collected funds will
be distributed. Be clear in your fundraising appeal from the beginning if there
are multiple purposes for the fund, such as funding future community needs
related to the tragedy. Many donors give with the expectation that all funds
will be distributed quickly and solely to victims and their families.
Online fundraising, especially peer-to-peer fundraising, is
a relatively new method of charitable fundraising. As a third-party fundraising
platform, you are giving charities and their supporters’ new opportunities to
connect with donors. To ensure that you are acting to the maximum benefit of
the charities and donors using your website, fundraising platforms should
follow these tips:
basic due diligence to discourage potentially fraudulent uses of your platform.
Verify on the IRS website that a charity is tax-exempt and that contributions
are tax deductible. Confirm the charity’s registration status in the states in
which it must register.
that a person claiming to work for a charity is actually associated with that
charity. Verify that any bank account information is associated with a charity,
not an individual.
each charity’s written approval before collecting funds for it. A large
majority of states, including Colorado, require express/written permission from
a charity before its name is used in connection with a solicitation.
the charities and their supporters who fundraise on your website:
disclose what type of vetting, if any, takes place before a charity can
participate on your website.
how often donations will be forwarded to a charity.
state if there is a minimum amount of contributions required before donations
will be forwarded and what happens if that amount isn’t met.
transparent about any transaction fees and the portion of a donation that
actually reaches the charity.
remove any charity that asks to be removed from your website.
contact information on your website specifically for charities to ask questions
or to report fraud.
donors’ information and make sure any personal or financial information you
collect about donors or charities is secure.
Develop and follow policies and procedures
that can help you detect more sophisticated attempts at fraud. Review and test
your policies and procedures regularly and fix flaws as they become known.
platforms should also be aware of possible legal requirements:
fundraising laws vary from state to state. You may be classified as an
unregulated vendor, or a moderately regulated commercial co-venturer or
professional fundraising consultant, or a more actively regulated paid solicitor/commercial
fundraiser. Make sure you understand
your legal status and any corresponding reporting or contractual
responsibilities in each state that you operate.
If you fall
under the legal definition of a professional fundraising consultant or paid
solicitor/commercial fundraiser, make sure your contracts with the
charities are in writing and include all of the language or disclosures
required by state law.
Be cooperative with
charity regulators and law enforcement if they contact you with basic
questions about how your fundraising platform works or with information
about a potentially fraudulent user of the platform.