Forewarned is Forearmed

By: C. Yvonne Chenier

March was fraud prevention month in Canada (see here) and I noted with interest that Capital One (http://www.capitalone.ca)   and CanadaHelps (http://www.canadahelps.org)  teamed up once again this year to survey donors and offer a charity fraud awareness quiz online. 

The survey results showed an increase in the number of Canadians who worry about fraudulent charities.  The press release about the newest survey (see here) indicated that: 'Canadians are generous donors, but two-thirds (65%) of them are worried about fraudulent charities, which is up considerably from a survey done in November 2009 (51%). These beliefs, coupled with the difficulty in recovering their lost donation, ultimately results in more than half of Canadians (53%) stating they are less likely to give to charities because of concerns about fraud." (Source)

Interestingly, one of the questions in the CanadaHelps Charity Fraud Awareness Quiz was the following true or false question: "Charity fraud schemes are one of the top 3 fraudulent schemes taking place in Canada currently".  The answer according to CanadaHelps is false with the following enlightenment:  "While they are high-profile and heart wrenching, charity fraud thankfully remains relatively rare in Canada. The more educated Canadian donors become at identifying fraud, the more money will flow to the legitimate charities and their good works. "

The lesson here is that even though charity fraud is not rampant in Canada, the perception among donors is quite different.  Charities who hope to solicit hard earned dollars from Canadians need to be aware of and sensitive to this perception and act accordingly. 

Potential donors are given five tips in the press release on how to protect themselves from fraud.  Canadian charities who hope to solicit donations from suspicious Canadians can be prepared by being proactive and responsive to the tips that donors have been offered.  These tips given to donors are highlighted below followed by suggested  tips on how the legitimate charity can be prepared to counteract any suspicions concerns.

1.      Donors are being advised to "Make sure the charity is registered with the Canada Revenue Agency (CRA)" so do make sure your charity is registered and the information is kept up to date with the CRA.  Take a minute to go online and see what information is posted about your charity on the CRA website.  Become familiar with the all of the information that is freely available to the public.  Be prepared with details to answer questions about your expenses and revenue.  This is more important if there are discrepancies from year to year.  Some provinces also have information about not-for-profit organizations under their control on public websites.  For example, the Government of Alberta has a searchable data base about any and all charities that are registered to fund-raise under the Charitable Fund-raising Act.   Know if you are registered or why you are not registered.

2.      Donors are being advised to "Ask to see a charity's financial statements" so be prepared to hand over your charities' financial statements when asked by a potential donor.  Furthermore, make sure you understand what they say and spend some time with the person who prepared or approved the statements to understand them.  Know who to ask for more information.  Donors are making an investment in your charity and they would ask the same of any other entity they were about to invest in. 

3.      Donors are being advised to "Understand the impact the charity has and what difference they make the outcomes of the programs and services that your charity provides" so prepare this information.  Get testimonials, impact benefit studies, program descriptions and whatever your budget will allow you to research.  Have this information readily available in an easy to understand format.  Donors want to make sure that their funds are put to good use.

4.      Donors are being advised to "Research the causes you want to support and how much of your budget you want to donate to charity". Help potential donors do research on charities.  Become the go to place for help and become familiar with all of the tools that a potential donor can use to get accurate information.  Using the tools on the internet should become second nature to you so you can freely share your research skills with your donors.

5.      Donors are being advised to "Avoid any charity that pressures you into making a donation" so simply do not use any pressure at all.   Instead leave them alone to make their donation decisions and encourage them to consult their financial and legal advisors or anyone else whose opinion they value before they make the decision.  But be sure to be available when they call!

As we used to say in Latin, praemonitus, praemunitus or as we now say, forewarned is forearmed.