Don’t Get Scammed — How to Avoid Nonprofit Donation Scams

Many nonprofit organizations rely on donations as a revenue source to carry out their important missions. Unfortunately, scammers sometimes try to take advantage by making fraudulent donation refund requests or trying to harvest personal information. These scams can have serious consequences for nonprofits, including financial losses and reputation damage.

Common nonprofit donation scams

Fraudulent donation refund requests typically involve scammers posing as donors and requesting a refund for a donation they claim to have made. They may use a variety of tactics to try to convince the nonprofit to issue a refund, such as claiming the donation was made in error or the donor’s financial situation has changed. Once the nonprofit issues the refund, the scammer disappears, and the cash check of the original donation bounces — leaving the nonprofit out-of-pocket.

Watch out for tax season scams

Tax season is a stressful time for many people, and unfortunately, scammers take advantage of by trying to steal personal information. Nonprofits are particularly vulnerable to these scams, as they often collect sensitive donor information during tax time.

Scammers use a variety of tactics to try to obtain personal information, including phishing emails, phone calls, and even fake websites. They may pose as the IRS or other government agencies, or they may claim to be representatives of a legitimate organization. Once they have obtained personal information such as Social Security numbers, birth dates, and financial information, they can use it to commit identity theft or other fraudulent activities.

Scam consequences for nonprofits

These scams can have serious consequences for nonprofits. Not only do they result in financial losses, but they can also damage the nonprofit’s reputation. Donors may lose trust in the organization if they hear it’s been a scam victim or their personal information has been compromised, and this could lead to a decrease in donations in the future. This could have serious consequences for the nonprofit’s ability to carry out its mission and serve the community.

Nonprofit fraud prevention tips

To prevent these types of scams, it’s important for nonprofits to take steps to protect themselves. This includes:

• Educating staff and volunteers about scams and how to identify them
• Implementing strong security measures to protect donor information, such as firewalls, encryption, and secure passwords
• Verifying donation refund requests before issuing refunds, such as by contacting the donor directly to confirm
• Being transparent with donors about how their information is collected, stored, and how donations are used
• Regularly reviewing and updating security policies and procedures

By taking these steps, nonprofits can help protect themselves from fraudulent donation refund requests and protect donor’s personal information. This not only protects the nonprofit and its donors, but it also helps to maintain community trust and that the organization can continue to carry out its important work.

How we can help

Professionals who work with nonprofits must know more than standards and regulations. They must understand the context surrounding the organization, the motivation of leadership, and the perspective of the people served.

CLA has the broad experience needed to help strengthen and guide your organization. Contact us for assistance.