’Tis the season for charity scams

As the holiday season rolls around, many Canadians get in touch with their generous side. It is also the time when charities hope to tap into the season’s giving spirit and boost their coffers before the end of the year.

A recent BMO Harris Private Banking survey showed almost 70% participants plan on donating a total of $487 to charities in 2011.

While charitable donations usually spike during the holiday season, so do fraudulent charity schemes. Canadians need to be judicious in selecting a charity, says Marvi Ricker, vice president & managing director of philanthropic services, BMO Harris Private Banking.

“It’s encouraging to see Canadians giving generously to causes that help those who are less fortunate,” says Ricker. “However, it’s important, especially during the holidays, to be mindful that our generosity can be abused. Unfortunately, every December many Canadians fall prey to pleas for assistance that appear on the surface to be genuine and legitimate but then turn out to be fraudulent.”

However, some charity experts say not to pay undue attention to the issue of fraudulent charities. Brad Offman, vice-president, strategic philanthropy, Mackenzie Financial, says it is “pretty disappointing” to see “just a few bad apples” becoming the focus when so “many charities are doing such an incredible” job.

“Canada has an incredibly strong charitable sector and it’s unfortunate that we even have to bring up the issue of fraud when talking about charities,” says Offman. “The vast majority of charities in Canada are doing a wonderful and legitimate work.”

The focus of what the charitable sector is doing should be on its good work, he adds. “Charitable sector is a legitimate part of our economy, society, and is really what we stand for as Canadians.”

Offman says the more proactive planning donors put in, the less likely they are to be subject to any kind of charity fraud. Questionable charities, he says, demand immediate commitment and cash donations, and often don’t have a website. Donors should look out for these classic signs in addition to “anything that triggers some sort of gut reaction.”

BMO’s Ricker offers some additional tips on how to spot and avoid fraudulent charitable requests:

Verify legitimacy: Ask those soliciting donations for proof of their identity and to provide the charity’s registered name, address and telephone number. Once this information is provided, be sure to verify with the Canada Revenue Agency that the organization is a registered charity or is affiliated with one.

Avoid giving cash: If the agency turns out not to be a registered charity, it is difficult to reclaim cash donations. Offer to make a donation online (after you do your research), or write a cheque and address it to the charity rather than the soliciting individual.

Be wary of rewards: Sound too good to be true? It probably is. Some illegitimate groups will promise grand prizes and sweepstakes as a reward for making a contribution. Be aware that most charitable organizations offer minimal to no incentives, as contributions tend to go directly to the cause itself.

Where is your money going? Be sure to ask solicitors where your charitable donations will be going within the organization, specifying what percentage will be credited to its solicitors, and how much to the cause. Legitimate, registered charities will have this information readily available.

Obtain a tax receipt: Always ask for proof that your contribution has been submitted. Not only will this benefit you at tax-time, but if a charity is unable to provide you with an official receipt, it is a warning sign that the charity is not registered.

Read more on charitable planning in ’Tis the season for charitable planning.