Montgomery County Executive Douglas M. Duncan today warned consumers about an out-of-state police charity scam operating in Montgomery County that spends the vast majority of the money it collects to pay the salaries of its staff and its fundraising expenses. Duncan noted that there is no evidence that law enforcement agencies in Montgomery County benefit from the funds raised from the group and urged the State of Maryland to open an investigation into this matter and step up its enforcement of these shady operations. Montgomery County’s Office of Consumer Protection (OCP) uncovered the scam and is conducting its own investigation.
“It is shameful that this unscrupulous group is trying to take advantage of our residents,” said Duncan. “Our community is always willing to help support legitimate public safety charitable organizations, but we will not stand idly by and have folks ripped off by this out-of-state sham outfit.”
The Police Protective Fund is currently soliciting donations in the County using a “mail drop” address in Bethesda, Maryland but used 91 percent of all donations to pay its management and general expenses and fundraising costs in 2004. In the last two reporting years the Police Protective Fund spent an average of 78 percent of the donations it received to pay fundraising and management expenses, according to information it filed with the Maryland Secretary of State’s office.
Charitable guidelines provide that a charity should at maximum spend no more than 35 percent of its donations on fundraising expenses. The Police Protective Fund’s high administrative costs raised red flags for Montgomery County Consumer Protection officials and prompted the warning today by Duncan.
“Consumers must be alert when choosing to give to a charity just as they are when considering doing business with any merchant,” said Eric Friedman, OCP’s Acting Director. “Non-profit status is unfortunately no automatic guaranty that an organization is operating without deception.”
Duncan today also directed the Office of Consumer Protection to formally ask the State of Maryland to launch an investigation into the Police Protective Fund, which is registered with the Secretary of State’s office, and urged tough enforcement action against them to protect consumers in Montgomery County and across Maryland. In a letter to Secretary of State Mary Kane, OCP Acting Director Eric Friedman wrote urging Kane’s office to launch an investigation into the business and reporting practices of the Police Protective Fund and all other organizations which purport to solicit donations in support of police and firefighters.
The Montgomery County Office of Consumer Protection is also renewing its notification to office rental firms that it is considered a deceptive practice for an organization to misrepresent a “mail drop” as an office or suite when, in fact, it is only used as a forwarding address. HQ, the office rental firm used by the Police Protective Fund, has agreed to take corrective measures to address those concerns as part of their interest in corporate responsibility.
The Office of Consumer Protection offers the following tips regarding charities:
• Ask for written information about the charity, including name, address and telephone number. A legitimate charity or fundraiser will give out information about the charity’s mission, how your donation will be used and proof that your contribution is tax deductible.
• Check with the Maryland Secretary of State by calling 1-800-825-4510 or online at www.sos.state.md.us/Charity/Charityhome.htm. All charitable organizations that either solicit contributions from Maryland residents or are located in Maryland are required to be registered with the Office of the Secretary of State if they collect more than $25,000 in direct public support or engage the services of a professional solicitor to raise funds for the organization. Check to see if the organization is registered and check the organization’s financial disclosure to see what percentage of its funds go to salaries/administration costs.
• Check with local recipients. If giving to local organizations is important to you, make sure they will benefit from your generosity. If a charity tells you that your dollars will support a local organization, such as a fire department, police department or hospital, call the organization to verify the claim.
• Watch out for similar sounding names. Some phony charities use names that closely resemble those of respected, legitimate organizations.
• Know the difference between “tax exempt” and “tax deductible.” Tax exempt means the organization doesn’t have to pay taxes. Tax deductible means you can deduct your contribution on your federal income tax return. Even if an organization is tax exempt, your contribution may not be tax deductible. If a tax deduction is important to you, ask for a receipt showing the amount of your contribution and stating that it is tax deductible.
• Be skeptical if someone thanks you for a pledge you don’t remember making. If you have any doubts about whether you’ve made a pledge or previously contributed, check your records. Be on the alert for invoices claiming you’ve made a pledge. Some unscrupulous solicitors use this approach to get your money.
• Refuse high pressure appeals. Legitimate fundraisers won’t push you to give on the spot.
• Be wary of charities offering to send a courier or overnight delivery service to collect your donation immediately.
• Consider the costs. When buying merchandise or tickets for special events, or when receiving “free” goods in exchange for giving, remember that these items cost money and generally are paid for out of your contribution. Although this can be an effective fundraising tool, less money may be available for the charity. It may also affect whether or not you can deduct the donation for tax purpose.
• Avoid cash gifts. Cash can be lost or stolen. For security and tax record purposes, it’s best to pay by check.
• Be aware that charities are exempt from the Federal Trade Commission’s Do Not Call Registry. Go to http://www.ftc.gov/donotcall/ for more information.
• Check out the charity with these organizations: BBB Wise Giving Alliance, 4200 Wilson Boulevard, Suite 800, Arlington, VA 22203, 703-276-0100 or www.give.org; or the American Institute of Philanthropy, 3450 Lake Shore Drive, Suite 2802 E, Chicago, IL 60657, 773-529-2300 or www.charitywatch.org.
The Office of Consumer Protection investigates thousands of complaints each year involving automotive sales and repairs, new home purchases, home improvements, credit issues, retail sales, Internet services and most other consumer transactions. OCP provides pre-purchase information to consumers, as well as speakers to the community on consumer issues.
For more information, call 240-777-3636 or visit www.montgomerycountymd.gov/consumer.
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