The holiday season brings out the best in many people, especially those who give of their time and money to charities. Retailers have found a way to get a piece of the action: Offer to donate a portion of sales to a charity.
But shoppers should beware of the catalogs and signs trumpeting charitable contributions. The results of these programs vary, and there is little to no oversight of them. Many retailers don't specify how much money will be given, stating only that a portion of proceeds will be donated. Others are more specific in terms of dollars to be donated for each purchase, but in almost all cases, no one is checking up on companies to see if they really made the promised donations.
Charities are sometimes being caught off-guard by these gimmicks used by retailers - some don't even know that their charity is being used in promotional materials. Some directors of non-profit organizations wonder if such promotions could diminish the goodwill associated with their names, particularly if some of these charity drives later turn out to be scams.Non-profits also worry that these retail promotions could hamper their ability to get direct contributions from consumers. Some potential donors might feel that they already "gave" at the retail cash register, and therefore might avoid a direct cash contribution in the future.
When participating in a retail promotion with a charity component, be on guard. If you were going to make a purchase anyway, you can feel good knowing your money might help the charity a little. But if you're purchasing strictly for the purpose of helping a charity, scrutinize the promotion carefully. You may be better off sending a few dollars directly to the charity. Otherwise, you can't be sure if your dollars will ever really get there.
Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Accounting. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.
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