There are around 1.6 million non-profit organizations in this country. Of those, upwards of 65,000 include the word “veterans” in their title. With so many seeking donations, it is more important than ever to be confident that when you give to a veteran charity your donation will actually be used to help our veterans.
Many people assume that if an organization has been granted 501(c)(3) status by the IRS, it went through a stringent application and review process and must therefore be legitimate. However, the truth is that there is minimal oversight of the process of creating a non-profit organization. In fact, the IRS recently simplified the application for 501(c)(3) tax exemption from 12 pages (plus schedules) down to only 3 pages.
With almost no ongoing oversight, many of these groups use only a very small portion of donation money to fund products and services for veterans. Worse still, there are fraudulent organizations that are used only to line the pockets of their creators.
For example, the United States Navy Veterans Association (USNVA) was a registered 501(c)(3) charity. It had many markings of a legitimate non-profit – a quality website, supposedly in operation since 1927 and dozens of purported chapters across the country with thousands of members nationwide. In reality, USNVA was run by one man out of his duplex in Florida. This sham charity bilked donors out of nearly $100 million over a seven-year period. The ringleader was arrested in 2012 and sentenced to 28 years in prison and $6 million in fines, but sadly most of these donations will never be recovered.
Fortunately, there are resources available to assist potential donors in verifying the legitimacy of a charity before donating. First off, the charity’s website can provide a first step – most legitimate charities post their financial statements and annual reports on their website so that the public may view them. Additionally, www.guidestar.org is a non-profit that provides detailed information about 501(c)(3) registered charities. Further, legitimate charities should be completely transparent. If an organization is not forthcoming about providing financial/audit statements, copies of their conflict of interest policy, or information about the board of directors and employees, there is cause for concern.
If you have questions about the authenticity of a veteran charity, or believe that you have been taken advantage of by a fraudulent charity, contact the experienced attorneys at Fausone Bohn, LLP. We can provide you the sound legal advice that you need. You can reach us at (248) 380-0000 or online at www.fb-firm.com.