Greater Consumer Protections Allow For Safer Giving This Holiday Season

by

Attorney General Ken Salazar

November 2003

Charitable giving is a longstanding tradition during the year-end holiday season. However, according to industry reports, charitable giving has declined. Leading surveys indicate that the top 400 charities in the nation will be forced to continue their missions with roughly $600 million less in donations than they had the previous year. Some charities may be forced to cut services because of fewer donations. There is no doubt that charities are facing a time when the need for services is great and donations are considerably less than in recent years.

While much of the recent decline in charitable donations may be related to the economy, consumers have perhaps become more hesitant to give to charities because of a lack of information and confidence as to where their money is going and how much actually gets spent on the cause to which they donate. As we enter this holiday season, it is important for consumers to be aware of recent changes in Colorado’s Charitable Solicitations law that give consumers greater protections and provide important information when giving to a charity.

The recent update of the Colorado Charitable Solicitations Act has resulted in the creation of an electronic charities registration program for charitable organizations and their fundraising professionals. This registration program is administered by the Licensing Division of the Colorado Secretary of State’s Office.

FOUR IMPORTANT TIPS FOR CONSUMERS

1. If a solicitor calls you: Ask for the caller's registration number AND the registration number of the charity they are representing. With some exceptions, charitable organizations seeking donations from Colorado residents must register with the Colorado

2. Ask every solicitor: "How much of my donation will actually go to the charitable organization?" If you think the amount is too low, or if the solicitor is unwilling to give you a direct answer, tell them "No thank you."

3. Ask every solicitor and charity: "Is my contribution tax-deductible?" If this is important to you, ask the question. Charities must indicate their tax-exempt status in their registration statements. Tax exempt does not necessarily mean that contributions are tax deductible. Do not accept a federal employer ID number as evidence of an organization's tax-exempt status with the IRS; that information alone is meaningless to a potential donor.

4. Check out the charity before you give, particularly if you are unfamiliar with it. Request written literature, including the organization's own annual report. Colorado law requires all charitable organizations soliciting contributions in Colorado, with certain specific exceptions listed in the Charitable Solicitations Act, to submit an initial registration statement with the Secretary of State and an annual financial report. The Charitable Solicitations Act is in the Colorado Revised Statutes at 6-16-101 through 113.

Registration statements and financial reports are available to the public online through the Secretary of State's Office at www.sos.state.co.us. Look under the "Licensing" link, then under "Search Charitable Database." The financial reports include yearly revenue and expense information for the charity. In addition, federal law requires that a charitable organization provide, upon request, a copy of its Form 990 annual information return and exemption application.

There are also some common-sense tips consumers can follow to make informed choices when giving to a charitable organization. Consumers should keep in mind the following tips:

GENERAL TIPS REGARDING CHARITABLE SOLICITATIONS

• Make checks payable to the organization, never to an individual.
• Don’t be fooled by names that closely resemble other well-known organizations.
• Don't be swayed by strong emotional appeals -- take some time to examine the charity's claims and to consider alternatives.
• Don't be pressured to make an immediate decision -- while donations will help, it is not likely that two or three days will make a difference. Be suspicious if the caller offers to send a courier to pick up your contribution or requests an immediate contribution. If you're not sure, ask them to send informational material and a contribution envelope.
• Ask for and get the name and address of both the paid fundraiser and the charity they represent.
• Numerous charity organizations maintain legitimate web sites through which donations can be made. However, e-mail solicitations are rarely used by these legitimate organizations to solicit donations. If you receive an e-mail solicitation directing you to a private web site which requests your credit card number, be wary.

If you believe a fraudulent fundraiser has contacted you, please call the Attorney General's Office at 1-800-222-4444, your local law enforcement office, or the Colorado Secretary of State's Office at 303-894-2200.

The Federal Trade Commission (FTC) is also a source of information about charitable scams. The web site is www.ftc.gov.

Another information source about charities is the Better Business Bureau’s Wise Giving Alliance, which is affiliated with the Council of Better Business Bureaus. The phone number is 1-800-575-GIVE. The web site is www.give.org.

These tips and services can help consumers make more informed decisions about charitable giving during the holiday season.