Potential for Scams Worries Charity-Watchdog Groups

With the creation of scores of new funds to collect money to help the individuals and families harmed by the September 11 terrorist attacks, legal authorities and charity watchdog groups are concerned about the potential that donations are being collected fraudulently.

Already, the Federal Bureau of Investigation is investigating a mass e-mailing that was sent out shortly after the terrorist attacks that may have been a scam.

Charity-watchdog groups have been warning donors about the need for caution in giving. "People in their despair are throwing money at organizations, but people really need to be careful," says Daniel Borochoff, president of the American Institute of Philanthropy, in Bethesda, Md., a group that grades nonprofit organizations on how much of their budget they spend on services and other criteria.

Says Art Taylor, president of the Better Business Bureau's Wise Giving Alliance, in Arlington, Va." "People start these efforts with good intentions, but not necessarily the skills to manage the organizations."

New funds should provide potential donors a budget, a list of the board of directors, and written materials that outline how the money will be spent, he says. He notes that many of the relief groups have sprung up so fast that they may not have all those items available, but says that in the least they should be working to have them ready for the public. Mr. Borochoff also has several tips:

• Seek out groups with established track records, and only to support newly created organizations if they are backed by a credible source.
  
  
• Avoid giving through campaigns that solicit cash in canisters or other such collection boxes. Though the organizers of those drives may donate the money to a worthy cause, it is almost impossible to guarantee they won't pocket the money.
  
  
• Make gifts via Internet sites that are connected to a major charity.