Open Hearts, Open Wallets: Signs of Non-profit Fraud

Welcome to the September 2025 edition of our newsletter!  In this issue, we’ll examine how fraudsters use non-profit groups, and less organized fundraising campaigns, to defraud others, and look at ways to be vigilant when making donations.

Preying on the Kindness of Strangers: Fundraising Fraud

For centuries, fraudsters have used charitable intentions and the bonds between like-minded groups of people, exploiting goodwill and trust to deceive caring people and organizations.  Social media has decentralized what was once a more narrowly focused scam: instead of falsely claiming to work with a legitimate group, such as a local firefighters’ association, scammers can now simply claim to have an incurable illness and use crowdfunding platforms to tug at the heartstrings of others.

Yet other fraudsters work to defraud government programs meant to serve the neediest populations, such as children with chronic health conditions, or those facing food insecurity and homelessness.  Spurred on in part by the coronavirus pandemic, state and county public health agencies increased their budgets to provide meals to elderly citizens who were no longer safe to go shopping, and other at-risk populations.  All of these changes created new opportunity sets for criminals who created bogus charities, delivery services, and other bogus firms to get contracts or charitable donations while providing few or no services.

If you have a client looking to donate, or an agency looking to enlist the services of a provider, the time and effort to thoroughly vet them will be well worth it.  Have the principals faced litigation from former partners or vendors?  If the service is in a regulated industry, is the agency (and often its principals) licensed and in good standing?  Scam artists prey on a willingness to trust and do good works, but the healthy skepticism of an investigator’s due diligence can often see past behaviors and problems that could be a sign of trouble ahead.