AOL?The New Spam/Scam Playpen
Under this business model, the charity—able to mail at ultra-low non-profit rates—has been set up as a front that funnels money into all these for-profit organizations. The main program is "public education," which is accomplished by sending out a lot of mail asking for money and including a few facts about AIDS, battered wives, starving children, abused animals, tsunami victims or global warming.
How to Determine if a Charity Is Legitimate
Four documents are needed:
1. The Direct Mail Package, Telemarketing Script, Web Site Pitch or TV Infomercial. This is what the charity is telling the public about its activities and how it spends its money.
2. IRS Form 990. This is what the charity tells the IRS about its activities. It states the revenue and expenses and what the programs are. When "public education" is in the mix, this should be a red flag. When a charity is adding a large percentage of its revenue to increase its endowment fund or net assets—rather than spending it on the primary mission—consider that another red flag.
3. Contract With the Fundraising Agency. This is the linchpin, without which any meaningful analysis is impossible. It will answer such basic questions as:
Who owns the donor list—the charity, the agency or is it jointly held? The house list is the main asset—in many cases the only asset—of a charity. Fundraising agencies that own or control the charity's list will charge the charity list rental fees to mail its own names and will keep list rental income from outsiders for itself. This is fraud.
*It is unethical for an agency to receive a percentage of the money raised. In the words of the Association of Fundraising Professionals (AFP):
16. Members shall not accept compensation that is based on a percentage of contributions; nor shall they accept finder's fees.