A Few Red Flags to Look Out For When Scrutinizing an NGO
“Time turns our lies into truth.”
― Gene Wolfe
Earlier this year, an interesting Twitter thread by the user @softlyemerging was posted regarding red flags she noticed for a particular NGO (the organization’s name is being withheld for the purpose of this article). The entire thread is worth checking out, as it is very informative not just for the NGO in question, but also as a rule of thumb when vetting NGOs–particularly American ones.
Inspired by her explanation and summary of what’s wrong with the NGO she was speaking about, we’ve taken some of those points here and added some of our own commentary about this as well.
Financial statements must be published annually
In order to qualify for and maintain your 501(c)3 status, the IRS requires you to publish a financial statement annually for transparency. As a principle, this is important because donors–both prospective and current–should be able to see where every penny is going, especially when the work involved requires critical attention, be it inner city youth, animal rescues, refugees, or elders and the disabled.
Unfortunately, receiving tax-exemption status as a 501(c)3 is something that is taken advantage of due to lack of familiarity with these laws and regulations: upon being granted 501(c)3 status, it is not uncommon for individuals to take advantage of this and solicit funding for the year that they have this status.
If they do not fulfill this requirement to publish a financial statement annually, they do not maintain 501(c)3 status, and while they may not legally be able to claim this status, the reputation they have and relationships they’ve built can remain for a time and exploit people’s ignorance. In the case of the NGO in question from the linked thread, no annual report has been published annually since receiving this status. An individual can still use the reputation of being behind an NGO to solicit funding by carefully wording their statements about the cause they represent and founding or working for their organization–but they omit having 501(c)3 status, in both past and present tense.
So if you are looking at an individual who says he advocates for child soldiers in Uganda and the East Africa region and that he founded an organization focused on it, if he doesn’t presently claim 501(c)3 status in any of his statements and lacks current financial statements for transparency, then he could have an organization that didn’t receive tax-exemption status, failed to maintain their status, or he has a fake website used to scam you–which is unambiguously illegal, by the way! In other words: begin scrutiny by following the money!
Check their methods of soliciting and receiving funding
It should go without saying that if an organization is asking for you to donate Bitcoin or some other cryptocurrency, you probably should hold onto your wallet and notify the FBI or IRS immediately.
Common small donations are often done via PayPal, as it’s a widely-available option worldwide compared to platforms like Venmo, CashApp, or Stripe that are limited to a small list of countries as a result of regulations for web and app-based financing varying between countries. When someone is using a crowdfunding platform such as gofundme, however, this is where it becomes suspicious due to the fee that gofundme takes, which is 2.9% + .030 cents. So this should be a concern when you find anyone trying to raise money if the fee for using the service is quite high, especially for critical causes, where again, every penny counts, so why lose a significant amount to just moving money?
Crowdfunding for charitable causes and NGOs isn’t uncommon–the platform indiegogo was used for one particular fundraising event with the specifically stated goal of asking for donations for a short specified term and cause, which in my own experience, was for heart surgery for a children’s hospital in Cambodia. Compare this to an ongoing and default method of getting funding, and using indiegogo or gofund me is not only suspicious, but highly impractical.
See if the people named actually exist, along with their work and credentials
An interesting point brought up in the Twitter thread was that several named individuals in documentation for their organization had questionable participation. One in particular not only lived in an entirely different state from where the organization was formed–he’s in Florida while the organization is in California–but he is also not even listed on the IRS website’s filings.
Variations of this behavior include shell organizations where associates are listed as key figures and in high positions, often for the sake of laundering money. Other times, you might find fake profiles using images you can find in the top web search results that are appropriated to things such as phony LinkedinProfiles and addresses connected to abandoned businesses.
One prominent individual in the People’s Republic of China claimed to have credentials from the European University of Ireland–which of course, does not exist, but the website that was created and the address listed was for an abandoned pub in Ireland.
In the example linked above from the Twitter thread, the use of those individuals was for social media rather than for paperwork: this is for a “lazy” effort to lure the average individual who may care about a good cause, but is unfamiliar with the workings of NGOs, laws, regulations, and procedures that identify legitimate work or not.To put it another way, it was looking for the spur of the moment donor who likes the idea, but doesn’t know much about the cause besides buzz words and image.
It’s very easy to create a fake profile–trolls do this all the time. It’s up to you to investigate this and warn others too.
Ask Charity Navigator and the Better Business Bureau!
The Better Business Bureau requires only a simple search to find out whether you’re looking at an accredited organization, and the website Charity Navigator also indicates if an organization has submitted paperwork to appear in their directory.
Granted, newer and smaller groups may still be seeking approval for 501(c)3 status, and with less manpower and financial resources, they may be in the process of getting recognized as a 501(c)3 and subsequently have yet to submit the necessary paperwork to either the Better Business Bureau or Charity Navigator.
Again: using your best discernment is how you can figure out if individuals and their organization are going on a public relations solicitation tour or if they’re just overwhelmed trying to get set up and running.
Look at yourself and how informed you are about the causes you support
In spite of all of the above criteria for identifying possible red flags, the key is to ask if you are an activist, a supporter, or follower (these three will be further elaborated in a future post).
If you are an activist, you are active: you take proactive attempts to do due diligence and don’t put all your eggs in one basket or one organization to make an impact or support your cause of choice. If you are a supporter, you care, though this can be limited to whatever information you might get in your e-mail subscriptions, which makes you reliant on the information given to you rather than what you seek out. If you are a follower, you might occasionally see information, memes, images, or videos in your social media feed, but it’s something you don’t necessarily think about or act on unless something inspires you for the moment.
Being anything but an activist here leaves you vulnerable to being deceived, because simply being a supporter if you are too busy to be proactive is exactly the opening that can be exploited since you aren’t actively protecting yourself by being well-informed.
Knowledge is power, but words and images carry quite a lot of influence themselves, too. Just ask anyone deceived by misinformation from memes and viral videos instead of cold hard facts. By arming yourself with knowledge and doing your due diligence, you can spot the red flags and help others by pointing them out and pointing them towards far more responsible organizations.
