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  • Writer's pictureAustin Jones

How Fraud Targets Philanthropy and How To Stop It

Philanthropy, the act of giving money or time to charitable organizations, is an important part of society. It allows individuals and organizations to make a positive impact on their communities and the world. However, unfortunately, philanthropy is not immune to fraud.

Fraud in philanthropy can take many forms, from individuals falsely claiming to be charitable organizations to organizations misusing donated funds. One common form of fraud is known as charity fraud, where individuals or organizations falsely claim to be a charity and solicit donations from unsuspecting individuals. These fraudsters may use a variety of tactics, such as telemarketing calls, emails, or social media posts, to solicit donations. They may also use a name or logo similar to that of a well-known and reputable charity to gain the trust of potential donors.

Another form of fraud in philanthropy is known as charity mismanagement, where a legitimate charity misuses donated funds. This can happen when a charity's board of directors or staff members use donated funds for personal gain, or when a charity fails to properly manage its finances.

In 2017 former Florida state rep Corrine Brown was charged with fraud. According to this article by The Tampa Bay Times - "Prosecutors said she siphoned money from the One Door for Education Foundation for personal use. They said the pattern of fraud by Brown and her top aide included using hundreds of thousands of dollars from the foundation to pay for lavish parties, trips and shopping excursions. Federal prosecutors said Brown, her chief of staff and One Door’s executive director used the charity to bring in more than $800,000 between 2012 and 2016, through donations and events including a high-profile golf tournament at TPC Sawgrass. The Virginia-based One Door gave out only one scholarship, for $1,200, to an unidentified person in Florida, according to court documents."

This was done by a trusted member of congress under the guise of a charitable effort for local education. These cases are all too common. Auditing services like SoshWallet can prevent this.

To protect yourself from fraud in philanthropy, it's important to be vigilant and do your research before making a donation. This includes checking to make sure the organization is a registered charity, and ensuring that the charity's mission aligns with your own values and beliefs. It's also important to be wary of unsolicited requests for donations and to never give out personal or financial information to anyone who contacts you.

You can also look for transparency and accountability in the charity, such as regular financial reporting, a clear and accessible organizational structure, and a clear and transparent use of funds. If a charity uses SoshWallet, they disclose their use of funds in real time by sharing auditing visibility of their bank account.

Fraud in philanthropy is a serious problem that can erode trust and undermine the important work that charities do. By being vigilant and doing your research, you can help protect yourself and your donations from fraud, while also supporting legitimate charities that are making a positive impact in the world. Look for charities that have good standings with state regulatory departments. Charities that go above and beyond. Charities that use SoshWallet!

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