Business Expert Explains How To Avoid Charity Scams
November 23, 2012 12:24 p.m.
Sheryl Bilbrey, President and CEO, Better Business Bureau San Diego
Related Story: Business Expert Explains How To Avoid Charity Scams
CAVANAUGH: This is KPBS Midday Edition. I'm Maureen Cavanaugh. Hearts and wallets tend to be open more often during the holidays. So it's a logical time for charities to ask for support. With so many organizations soliciting from street corners, on the phone, and through the mail, how can you make sure your donations are going toward a legitimate charity? The San Diego chapter of the Better Business Bureau is trying to help consumers make better business choices by reviewing charities on more than 20 standards of accountability. Joining me now is my guest, Cheryl Bilbrey. President and CEO of Better Business Bureau San Diego.
BILBREY: Thank you so much for having me.
CAVANAUGH: Let's start out with the obvious red flag things that can easily identify a solicitation as a scam. What are some of those things that people really should not just by seeing them? But you find people are sometimes tricked even by the most obvious scams.
BILBREY: For me, the more common ones are high-pressure sales tactics, high-pressure over the phone or when you're walking out of a store, and then refusal to provide information. So you really should demand information of a charity that you're considering giving a contribution to. Look at their financial information, look at their governance information, and if you've received a phone call, someone soliciting you, your money for a legitimate charity is just good tomorrow as it is today. Will take the time, ask them to send you the information on the charity, if they're refusing and they really want you to give right then and there, that's a big red flag.
CAVANAUGH: Are there a lot of scams out there?
BILBREY: Especially during the holiday season. It's a time when people's hearts, and we want to open our pocketbooks and we want to give. I was a victim of a charity solicitation actually after 911. It was the retired firefighters' association called me, and I didn't know that there were guys operating out of their garage with a PO box number. They sent me a sticker to put on my car which basically said you're a sucker of a not legitimate charity. And especially our elders, they take advantage of our elders who are very, very trusting and they don't want to come forward and say I think I've been victimized. Oftentimes they don't find out because how do you know? You really have to do your homework. So you can't imagine someone would call you posing as the retired fighters' association, or sound alikes or the exact name. I'm calling from the united way or the Red Cross, and we're soliciting donations for super storm sandy. Do you want to help the victims? Of course you do. But how do you know that's actually the charity on the other end of the phone that you're providing your financial information or credit card to?
CAVANAUGH: That's fascinating. So there are actual incidences of people using the names of legitimate charities when they solicit over the telephone?
BILBREY: Absolutely, absolutely. Or soliciting e-mail just for the purposes of downloading malware, or phishing purposes.
CAVANAUGH: How many charities has the BBB reviewed?
BILBREY: Thousands nationwide. Under the BBB umbrella is the wise giving alliance. And they had a merger a few years ago, but they have been around for decade evaluating charities against a good number of standards. Locally, we just started doing this evaluation in the last few years. And we don't have a lot of local charities that have subjected themselves because it's a very rigorous review process. It's time-intensive, labor-intensive, and we've got 500 charities in San Diego. A lot of them are very, very small. So we're trying to help make them better, but it's a tough process.
CAVANAUGH: What are some of the charities here that have met your standards?
BILBREY: Oh, you're asking me to pull these off the top of my list! You can find them at BBB.org. But make a wish has met the standards. Challenged athletes' foundation has met the standards.
CAVANAUGH: I believe St. Vincent DePaul.
BILBREY: Yes, yes.
CAVANAUGH: But I want to talk about this rigorous review that you put these charities under because it really does take a lot of work to get the okay, if you will, from the Better Business Bureau. How do you review them? I read there's 20 points that people have to submit to your organization for review?
BILBREY: There are. And we evaluate businesses and charities. They're on completely separate criteria because they serve such different purposes. The businesses are evaluated against eight standards. We've got 20 standards for charity, and in the case of charities we will show you for each charity every standard and whether or not they meet that particular standard. So you may have one charity that meets 16-18 standards. You have the opportunity to look and see which standards those are and whether you feel they're really significant to you. Maybe the Board of Directors meets two times a year instead of three times a year, and that's not as significant as a standard that says, gosh, they're only giving 30% of their contributions to the actual cause, whereas the wise giving alliance expects them to give 65%. So you can really look in detail at the standards of a charity that's been reviewed, see what their performance is, how they measure up, and then make a determination whether that's the best place for your money to go where your heart is wanting it to go.
CAVANAUGH: I believe one of the standards is effectiveness. How do you measure that?
BILBREY: The Board of Directors has a responsibility to evaluate the organization and determine from a mission perspective what goals they're trying to accomplish. So having some kind of assessment, it's like having an employee without a review. How can you expect them to perform? It's the board's review of the organization. Are they setting goals? And are they accomplishing those goals on an annual basis? I think that's something we would all want of any company or organization that we're supporting.
CAVANAUGH: So it goes to the point of the charity itself knowing what its mission is, knowing what the criteria are to measure its own effectiveness that they're going to submit to you and say, okay, this is what we wanted to do and this is what we did?
BILBREY: Absolutely! And remember a number of these charities are very small. It's a couple of people that got together, they want to serve a mission, and it's very worthwhile, but sometimes if you have a person or two making decisions, then the mission of the organization can change. The services they're providing, and the hospital can change. Maybe they stop serving cancer patients and start serving leukemia patients or they find another area of passion, and they're taking your money and using it for a cause that you didn't intend it. It doesn't make it a bad cause. It's just something to keep -- having that assessment keeps the organization on tack. And that's really the purpose of having a Board of Directors, making sure that there is a board, that they're meeting on a regular basis, that there isn't a conflict of interest so it's not a self-serving person running the charity. You upon the charity to fulfill the mission that it's stated and put forward.
CAVANAUGH: Even larger charities can run afoul of that. I remember several years ago some I think it was after 911, some people wanted to donate to the to 911 from the Red Cross, and they found the red cross was using that money for other purposes, great purpose, helping people, but not toward 911. And now I believe red cross designates certain funds. If you want to give to this or that disaster. So that kind of review that you're doing might have provoked that kind of specificity in the way that these charities are doling out their money.
BILBREY: You're exactly right. The wise giving appliance has a significant Board of Directors that has people not only from the charity community, but also from the donor community, from the foundations, from civic, business, and all of those people together continue to evolve those standards. And the one that you called out exist ares as one of the BBB/wise giving alliance standards, and that's looking at it program by program to understand the administrative costs versus the costs of the mission that are actually services. So you don't put all of your costs under one program, and all of your benefit under another program and you make a particular program look extremely beneficial or lucrative when the money is all being earned under another area that you're not really serving.
CAVANAUGH: Before I go to the more general information that you have about charity, I want to talk about the finance aspect of your reviews of these charities. What are your standards there? How much should a charity be spending on their programs as opposed to overhead?
BILBREY: Well, we look at a 65/35 split. That's kind of the barrier marker. But I wanting is depending on the type of cause that you're looking to support, you might compare different charities. There are some causes where the administrative costs can be particularly high because of the nature. The service. If we're trying to provide some relief to people in Haiti, there are transportation costs to that. So I think if you were looking at a particular cause, it would be good to look at different charities. And some of them may be as high as 80% or 90% that they're able to put toward the cause versus administrative costs. But we don't like to see any more than 35%.
CAVANAUGH: You have some general advice on charities that's really helpful. And they go against a lot of solicitation that we get at holiday. You say we should pick our charity and not have the charity pick us. Can you explain that?
BILBREY: I think when I'm shopping at the grocery store, they do a really good job of making me feel guilty, like I don't want to give to muscular dystrophy, and it's only $0.36! It's just round up the dollar and give this little extra money. The think about charitable giving, it should be a cause that you're about that is important to you that you select. And when you donate your money, you want to track that money so you that you get the tax benefit from your donation. So keeping track of your donation if are your own personal gain is important, but also you making the determination of what's important to me to support the cause that's important to me to support versus the little extra change at the grocery store. I'm also concerned when I see that happen about -- there are charities that do deals with retail outlets. And what percentage of the money are they taking? Does the percentage of the money that the retail outlet is taking, is that counted if that's a commission against the money that the -- the administrative versus program fees evaluation that we do. So if I want my whole dollar to go to the charity that I am choosing, I think it's important that I send it directly to the charity, I keep track of it, I can put it on my taxes and take the deduction. And I don't like to feel guilty. And I don't, but I don't like people being made to feel guilty either. And I also see just boxes showing up with help the abandoned kittens or whatever beside the cash register. And you've got 17, 18, 19-year-old kids in essence, and they're hard up for cash especially around the holiday season. It's just too tempting. So I'm not one to toss cash in a bucket. Salvation army, red bucket, that's all good. No problem with that! That's about the only one that I'm comfortable throwing a dollar in or someone catching me on a sidewalk. I just do you think that's a prudent, conscientious way to make a charitable donation.
CAVANAUGH: What about the mailings that you get? During the holidays they come very fast and furious from a lot of different organizations. National organizations and local organizations. How does the idea of you picking the charity work when you get a mail solicitation?
BILBREY: Once again, I think it's about ensuring that you are communicating with and giving your money to the actual cause. There are a lot of illegitimate mail solicitations. And once you give to one, just $10 or $20, you're going to get on the sucker list. And if you have an elder in your life and you're seeing a big pile of mail coming in for donating to a number of different causes, they've probably gotten on one of these sucker lists. And what we see in the mail is, they're very long on the sob story, very short on any hardcore data about how much money they have and where the money is going. So again, if you take the time to ask for information, just -- if you don't have familiarity with the Internet and there isn't a phone number to call, shoot them off a letter if you have the time and just say, hey, I would like more information on the charity, please send it to me in the mail. If they send it to you, then you probably have something that's legitimate. Because the illegitimate ones won't.
CAVANAUGH: That probably goes for people who go door to door selling thing, and I'm not really talking about school kids from a school that you can identify. But rather bands of young kid who is go around and try to sell holiday wrappings or cards.
BILBREY: It's the hardest thing because if you don't know the kid, they can represent that they're from the neighborhood, and I was the band kid that had to run around and sell the candy, so I know how hard it is! And everyone that knocks at the door, just for being that brave, I want to give them some money! You about unfortunately, the bad guys are using young kids. And you don't want to support that kind of labor. You don't want to support that kind of injustice, and they are absolutely using charities for their cause. Upon I was at the Nebraska football game at the respect rose can have bowl stadium, and a guy came around with a laminated badge soliciting for a charity. And he had brochures that he could have picked up off the counter, claiming that there were 30 people canvassing. I don't think so. I think it was a guy working a crowd. And my friend pulled $10 out of his pocket to give him. And wait a minute! He's going to take it and by liquor. I guarantee you. That's where that money is going. You just can't be assured that it's going to the charity when you're giving money on the spot at your door.
CAVANAUGH: When you feel on the spot.
BILBREY: When they come knocking, don't trust it.
CAVANAUGH: There's so much very good information about this, all the questions that you ask the various charities, all the information that they provide. Where can people go to find out more about the better business bureau's reviews of charities?
BILBREY: When you go to BBB.org there, is an "about charities" link. If you're wanting to give directly to the charity information, we also have give.org, which will take you to the same information. And if you just take the time to look through the standard, it will really enlighten you as to why governance is important, why looking at the mission is important, why looking at the finances are important. And you'll be better educated to ask good questions so that you can have a level of confidence that your money is going to a charity and a cause that will really serve the purpose that you're hoping to serve.
CAVANAUGH: Thank you so much for speaking with us. I have been speaking with Cheryl Bilbrey, president and CEO of better business bureau San Diego. Thanks so much.
BILBREY: I appreciate being here!