Religious Charities: Are They Scams?

The history of religion and charity is a complicated one. While most religious charities exist for the benefit of the people and values they serve, there is no doubt that some religious charities exist first and foremost to collect money - many through dishonest means.

As religion often urges its followers to be generous and compassionate toward those in need, religious people may become victims of scammers whose objective is to earn an easy dollar.

According to ScamWatch.au, it is not rare for scammers to “impersonate charities and ask for donations or contact you claiming to collect money after natural disasters or major events.”

Similarly, CNBC reported, “affinity fraud losses [that target victims through a common bond, most often religion] run into the billions of dollars per year.”

“People want to trust,” said Jenice Malecki, a New York securities lawyer who specializes in affinity fraud cases, in an interview with CNBC. “Especially in affinity situations, where people feel more comfortable for one reason or another, be it a church or ethnic community, they tend to not look as hard as they should at what’s in front of them,” she reported.

Such religious charities, then, are considered a “scam.” CNBC has noted various examples. Ephren Taylor (now serving a 19-year federal prison sentence) stole $16 million from members of churches in 43 states by preaching the so-called “prosperity gospel,” posed CNBC. The charity turned out to be a Ponzi scheme utilizing promissory notes that left hundreds of investors without the promised return.

The infamous Bernard Madoff’s Ponzi scheme of nearly $20 billion similarly left Jewish communities in New York and Florida without their promised returns.

In Utah alone, the FBI is investigating $2 billion of fraud, many incidents of which are related to fraudsters posing as the Mormon Church.

All this said, it is not necessary to throw out the baby with the bath water - most religious charities out there represent real, honest causes and are worthy of donations. One should be aware of the warning signs of fraud in order to choose an honest charity.

ScamWatch suggests that warning signs include: non well-known charities approaching you; a charity that has no identification; a charity that puts pressure on your or makes you feel guilty or selfish if you do not donate; a charity that asks you to provide a cash donation; a charity that asks for a check made out to an individual rather than to the charity; and a charity that does not give receipts or one that does not have the charity’s details on it.

Even charities that are real may not always be honest and efficient with your donations. Charity assessments, the process by which a third party analyzes the honesty and efficacy of a given charity, may be an effective tool to help consumers make informed decisions when it comes to giving. Assessments in the form of charity ratings offer set guidelines that rank the reliability of organizations to ensure that money is spent on the issues that matter most.

Evaluation tools like the BBB Wise Giving Alliance and Charity Navigator promote high standards of conduct among organizations that solicit contributions from the public. With reports and evaluations regarding governance and oversight, effectiveness, finances, fund raising and informational materials, it is suggested to look up on evaluation sites a given religious charity before donating.

As a donor, it is smart to look further into any given charity to which one plans to donate. Looking further into their accountability can increase the chance that your hard earned money is going to a religious charity that serves the people, rather than the owners and board members.

Examples of good, honest religious charities that have high ratings on evaluator sites and are not scams:

• The International Fellowship of Christians and Jews promotes understanding and cooperation between Jews and Christians. Headed by Rabbi Yechiel Eckstein, the charity received a 100/100 for accountability and transparency and 73.77/100 for financial.
• American Jewish Committee, promoting global Jewish advocacy, is headed by David A. Harris. The charity received a 93/100 for accountability and transparency and 86.56 for financial.
• The Jewish Federations of North America aims to protect and enhance the well being of Jews worldwide. Headed by Jerry Silverman, the charity received an 89/100 for accountability and transparency and an 87.50/100 for financial.
• American Jewish World Service works to alleviate poverty, hunger and disease among the people of the developing world. Headed by Robert Bank, the charity received a 97/100 for accountability and transparency and an 88.73 for financial.

While most of us expect each and every charity to be fully dedicated to philanthropic giving, this is not the reality. Although giving others the benefit of the doubt is a kind gesture, when it comes to charitable donations, it is beneficial to be cautious. A further, discerning look into a charitable organization empowers the philanthropist to ensure that his or her donation makes the largest impact possible. Doing so could save the donor from losing money in financial scams, and in addition, it ensures that your much-needed donations are indeed going to the legitimate charities and causes you care about most.