Nov 2, 2015
Not everyone wanting to help a nonprofit through donations or event planning has the best intentions, unfortunately. Your organization must be on the lookout for any potential scammers trying to defraud your not-for-profit. Being swindled doesn't just affect your financial situation, it also erodes the public's confidence in your organization. Gaining and maintaining trust is a crucial component in running a nonprofit. Donors will not want to give to your organization if they are suspicious of what their money is going to.
Better to be safe than sorry
While no one wants to second guess a donor's intentions or even a company willing to work with a nonprofit to plan an event, not-for-profits must do their due diligence and research. Having the right fraud protection and prevention tools in place on your website along with certified payment processing can help. However, nonprofits also need to be aware of the organizations they partner with when it comes to hosting fundraising events.
According to Nonprofit Quarterly, charities and not-for-profits should especially research fun-run vendors, due to recent events, before partnering with them.
Some organizations discovered this year that they were bilked by companies purporting to put on 5K races to raise money for not-for-profits. Kid Power, a Washington, D.C., nonprofit that provides after-school assistance to students, said it was recently scammed out of $8,000 by an event organizer called Viral Events, Nonprofit Quarterly reported. Viral Events, a Utah-based company, holds Run or Dye 5K races around the country where participants jog while color dye pellets are thrown at them.
The Better Business Bureau of Utah lists hundreds of complaints against the company, according to Nonprofit Quarterly, along with accusations that the planners did not refund runners' money after cancelling races. Twenty-three nonprofits said the event planner violated contracts with them, too. However, the head of Viral Events said his company made a series of business mistakes and asked the not-for-profits he partnered with to remain patient as his business tries to pay them back.
Meanwhile, Minnesota's Attorney General, Lori Swanson, is taking a separate fun-run planner to court suing Frederick B. Kellogg, owner of LoziLu, and Fresh New Taste, LLC for marketing their runs as charity fundraisers, according to The Minneapolis Star Tribune.
The newspaper reported the money raised from a LoziLu women's-only mud race would go to support cancer charities, including the Leukemia Ironman Fundraiser for Eric, a small Wisconsin-based nonprofit. However, LIFE never received any of the donations runners sent to Kellogg and he won't answer the not-for-profit's demands to stop using its the LIFE name, the paper noted.
Your nonprofit must be cautious when hiring outside help to put on fundraising events. Do your homework by researching a company or event planner's reputation and see if they have any complaints filed against them with any Better Business Bureau locations across the country. Taking prudent steps can save your own reputation in the long run