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Financial Planning > Charitable Giving

IRS Warns of Charity Fraud

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The Internal Revenue Services announced Monday that it is joining the international fight against fraudulent charitable organizations during Charity Fraud Awareness Week, Oct. 17–21.

The IRS cited research by the Fraud Advisory Panel, a U.K.-based organization, that charities will lose 5% of their revenue each year to fraud. Cybercrime is on the rise, according to experts, including attacks on charities, their supporters and beneficiaries.

“We’d like to thank the Fraud Advisory Panel for reminding donors to remain vigilant,” IRS Director of Exempt Organizations & Government Entities Robert Malone said in a statement. 

“Unfortunately, natural disasters, like Hurricane Ian, provide an opportunity for charity scammers to take advantage of genuine efforts to help. I urge donors to verify a charity’s tax-exempt status at Tax Exempt Organization Search before donating goods, services or money.”

Cybercrime that targets charities is part of a large set of activities that target the philanthropy sector. Criminals who create fake charities are also a problem. Fake charities are part of the IRS’s Dirty Dozen tax scams for 2022. 

The IRS noted that charities, regulators, agencies, law enforcement and other not-for-profit stakeholders around the world are working together to raise awareness about fraud and cybercrime that affects charities. These efforts resulted in seven days when supporters actively discuss fraud, share best practices and offer helpful resources.

The agency urged donors to vet legitimate and qualified charities by using the verification tool on Donors should never feel constrained to give immediately, it said.


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