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Illuminating Nonprofit Fraud

Yesterday, the Federal Trade Commission (FTC) and state charity officials announced more than 100 legal actions against charities that fraudulently claimed to be using donations to help veterans. The charges ranged from filing misleading information with regulators to diverting donations to organization leaders and paid fundraisers. A few nonprofits received warning letters. Others were fined heavily and ordered to dissolve.

As soon as the FTC released the list, our team got to work reviewing the information. We found that five of the organizations had earned GuideStar Seals of Transparency. In accordance with our fraudulent information policy, we examined their Nonprofit Profiles and took the following actions:

Organization   Seal Level   Action Taken
Healing American Heroes/Help Our Wounded   Silver   Seal and all information provided by the organization removed because state regulators found it had misrepresented its financials.

Healing Heroes Network   Silver   Seal and all information provided by the organization removed because the profile states the organization has dissolved.

Help the Vets, Inc.   Gold   Seal and all information provided by the organization removed because state regulators found it had misrepresented its financials.

Operation Troop Aid (OTA)   Silver   Seal and all information provided by the organization removed because state regulators have ordered the organization to cease operations.

AMVETS National Service Foundation   Platinum   None. The organization was issued a letter of caution for failing to register in Georgia and not including correct language on donation bins. We believe this level of legal action does not merit removing the Seal or information provided by the organization at this time.

An organization earns a Seal of Transparency by adding information to its GuideStar Nonprofit Profile. The amount of information a nonprofit adds determines which Seal it earns.

More than 54,000 organizations have earned a Seal of Transparency. We believe most of these nonprofits are acting in good faith, and that the information they provide can be trusted. We are, however, constantly evolving our procedures to better identify the rare cases when a nonprofit provides dishonest information, as was the case here. We also work with regulators to provide them with the data to they need identify potentially fraudulent organizations.

Although we don’t have resources to review every piece of information that every organization updates on its GuideStar Nonprofit Profile, we do investigate every nonprofit that is brought to our attention as potentially having inaccurate information. If you believe an organization has submitted false information, please contact us at support@guidestar.org. Be sure to provide the nonprofit’s name and Employer Identification Number (EIN) in your message.

We firmly believe that the overwhelming majority of nonprofits are run by sincere, honest individuals who are working to accomplish their organizations’ missions. As Nebraska attorney general Doug Peterson said yesterday, “While the enforcement actions announced today represent some truly bad actors in the charitable sector, the vast majority of charitable organizations do good and important work.”

Illuminating Nonprofit FraudEvan Paul is GuideStar’s vice president, products.

Topics: FTC Federal Trade Commission NASCO GuideStar Seals of Transparency Nonprofit Fraud
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