Laws Help but It’s Up to Donor to Spot a Scam

What homeowner isn’t ambivalent about strangers going door-to-door collecting for the homeless or the missions or the vets? Confronted by men in clerical collars from unfamiliar churches, and fast talkers pushing trash bags, light bulbs and candy for the poor, homeowners are often suspicious about the group, the solicitor or both. They may give something anyway.

“There’s the intimidation factor,” says Bill Newsome, San Diego deputy city attorney heading the consumer fraud unit, “and the guilt factor, all wrapped up in the ignorance factor: They don’t know who this person really is or how much money is going where.”

Nowadays, more charities solicit by mail or phone, often hiring professional fund-raisers. “Very few are door-to-door now,” says George Delianedis, assistant general manager of the Los Angeles Social Services Department, “because that’s maximum effort and minimum return.” The neighborhoods are left to groups with many volunteers--often kids--and to individuals who merit suspicion.

Disclosure Emphasized

Governmental protections tend to focus on the ignorance factor, emphasizing disclosure. In many states, nonprofit groups, including charities, must file financial information with the attorney general or secretary of state. Charities and charity solicitors may also have to register separately, providing such specific financial information as the percent of donations put to charitable purposes, to administration and to fund raising.

Some states, California included, have laws requiring solicitors to give prospective donors such information up front, unbidden. An unpaid volunteer can instead refer the donor--providing names and addresses--to the organization itself, which must then provide the information.

Cities and counties may have ordinances as well. Paid or volunteer, no one may solicit in Los Angeles, for example, without filing financial information with the city’s social services department, getting approval, and displaying to donors an information card that provides details about the organization, its officers and some of its finances. The city further requires that professional fund-raising companies and paid solicitors--who may take up to 90% of what’s collected for their fees and expenses--be licensed and bonded.

But such regulations may have weaknesses, including a lot of exemptions. New York state, for example, exempts government entities, religious corporations, many educational institutions, hospitals, chartered historical societies, and fraternal, patriotic, veteran, volunteer firefighter, social, student or alumni organizations. Los Angeles exempts religious, political and animal-welfare groups.

No Protection From Deceit

The regulations may therefore confuse rather than help someone facing a stranger on the doorstep. In Los Angeles, for instance, that information card assures homeowners that a group qualifies as a charity: the Girl Scouts have a card because their cookie sale proceeds fund a nonprofit group, but those selling light bulbs for the handicapped have none, being simply businesses that hire the handicapped.

Still, some groups without cards “may be legitimate, but we don’t take jurisdiction,” says Emma Weintraub, principal investigator for the Los Angeles Social Services Department. “If they’re collecting for their religious organization, and it goes into the church coffers, they need not file, but if it’s for something like a mission or the homeless (even a church-run mission), they do.”

What’s more, laws covering charitable solicitations don’t really protect homeowners from deceits and false representations--the fake ministers, the people implying but not willing to prove affiliations with Unicef, the Red Cross, hospital burn units. “What do you do?” says Newsome. “Send the cops to catch them? They don’t leave the name and address of their company, its president, bank and 10 references. All they say is ‘Hi, I’m Chuck.”’ If caught, “they say they give some money to those groups,” says Carole Kornblum, a San Francisco-based California assistant attorney general, “and if they give a few dollars, technically it’s not fraud.”

More crippling to regulation, some of the strongest laws have been undercut by a series of U.S. Supreme Court decisions that find some of their stricter provisions unconstitutional, interfering with the right to free speech in advocating causes. In 1980, the court ruled that Schaumburg, Ill., could not prohibit door-to-door solicitation by Citizens for a Better Environment under its ordinance requiring that at least 75% of a soliciting group’s donations be used for charitable purposes. Similarly, in 1984, it ruled against a Maryland law forbidding solicitations if more than 25% of the money collected was spent on fund raising.

Burden on Donor

Last year, moreover, the court ruled that a North Carolina disclosure law (and by extension, those in other states) requiring solicitors to give potential donors financial information during the solicitation itself also violated free speech rights, having a “chilling” effect on the presentation. Thus, says Kornblum, California’s “key disclosure provision--the percentage that goes to charity--is unenforceable now.” Requiring such disclosure in the pitch “does have a chilling effect,” she says, “but that’s the point.”

The information must still be filed with authorities, however, and it’s public--to those who ask. Anyone being solicited, moreover, can demand such information on the spot, and let his donation depend on the response.

“The burden,” says Newsome, “has fallen back on the donor, who has to get beyond the intimidation, guilt and ignorance factors by himself.” His best weapon, says Los Angeles Deputy City Attorney Sue Frauens, consumer protection supervisor, is a full roster of questions: “Where is their ID? What is their tax-exempt status? How much of each dollar goes to the charity? Are they a third-party fund-raising group? Then, never make out a check to the person soliciting, or to the fund-raising company, and don’t fall to pressure tactics. Demand information, time to think, and an address so you can mail your check in.” After all, she adds, “Why should someone get upset about that? Unless . . . .”