The Informed Philanthropic Advisor: Three Red Flags to Watch for to Ensure a Charity’s Legitimacy

You’ve made it to the third edition of The Informed Philanthropic Advisor! We know you’re the seasoned expert when it comes to counseling your clients on their financial and estate matters, and if you’ve been following along in this series, by now you’re well on your way to becoming a knowledgeable and skilled professional when it comes to advising on all things philanthropy.

So—you’ve had the conversation about charitable giving with your clients, and you’ve helped them to unearth and identify some causes they feel a deep connection to. What’s next? It’s time to start selecting specific organizations!

Fraud Alert

Your clients are at the point where they want to give, and you’ve been a pivotal voice in their decisions up to this point—but they may still need some direction when it comes time to select a charity. Not only that, but with charity scams growing steadily since the onset of the COVID-19 pandemic—a major time of crisis for many, your clients are looking to you for guidance and expertise.  

Are you prepared for the challenge of ensuring your clients’ donation dollars are being put to good use?

Bloom Has You Covered

Bloom Investment Counsel is pleased to engage in the conversation with the release of a new series of guides to help you, the professional advisor, during every step of the philanthropic process. 

In this third edition of The Informed Philanthropic Advisor, we examine some of the red flags to watch out for when researching relevant charitable organizations  on behalf of your client. Furthermore, we’ll break down some surefire signs that a charitable organization is legitimate.

Be sure to catch up on our previous articles, The Informed Philanthropic Advisor: Missing Out on This Conversation with Your Clients? It Could Cost You! and The Informed Philanthropic Advisor: Three Important Signs Your Client Needs Your Help if you haven’t! Now, settle in with this guide and be on your way to becoming the best possible advisor to your clients in their philanthropic journey!

Fostering Charitable Connections

Identifying with and selecting a cause is one thing, but finding the organization that your client can truly connect with is a significant undertaking.

A Word from the Experts

We chatted with Toronto-based Strategic Growth Partner Joanna Bacchus, who specializes in corporate giving strategy. She offered up some of her top tips for not only how to help your client identify a specific charitable organization, but also how to help them to ensure they can truly identify with it.

“Once you’ve decided on a cause, it’s important to really familiarize with the organization—begin by visiting their website and getting your hands on any press coverage that’s out there,” Joanna says.

 “While it’s valuable to provide your clients with some suggestions, it’s amazing what can happen when you encourage the client to do some of their own research. By engaging them from the get-go and placing them in the driver’s seat, it’s amazing how connected they can become to an charity, once they do their due diligence and find one that speaks to them.”

How Can You Ensure a Charity is Legitimate?

Charity scams adversely impact nearly everyone involved—the donor who experiences fraud, legitimate charities which do not obtain the funds as intended, and the individuals or entities in need of charitable support. 

Not only that, but facilitating  a donation on behalf of a client to an illegitimate charity is less than ideal from your perspective—the last thing you’d want is to appear ineffective when it comes to philanthropic advice. Thus, no matter the cause you and your client have landed on, it’s vital to conduct in-depth research on the charity at hand prior to committing to donate.

Erring On the Side of Caution

It’s more important than ever to be vigilant, as the number of scams could be on the rise. Mark Blumberg, Toronto-based lawyer specializing in charity law, noted on Smart Giving that the Canadian Anti-Fraud Centre is warning about COVID-19 frauds.

”With the worldwide concern about COVID-19 there are people out there who will take advantage of others through fraud and deception. Charities and non-profits in communities across Canada are often in the forefront of dealing with the problems created by COVID-19 – they deserve your support but just be careful out there”, says Mark.

 Here are some tips to ensure you and your clients do not fall victim to any charity scams.

  1. Check Out the Charity’s Website

The charity’s website is a great starting point for determining whether a foundation or charity does what they say they do. A legitimate non-profit organization will typically display their goals, past endeavours, financial statements, governance structure, fundraising efforts, and more. 

You  should also be able to view their contact information should you wish to speak to them further (remember, that’s always an option!). A valid organization should be easily accessible, so don’t hesitate to phone up or email a representative to make further inquiries.

  1.  ‘Walk the Walk’ by Volunteering

Joanna Bacchus weighs in on this tip.

“One of the best ways to know if a charity is legitimate is have your clients either volunteer themselves, or get someone to volunteer on their behalf and report back to them with insights—it’s so valuable to be on the front lines and get in the mix to see firsthand what they’re all about”, she says.

“An organization can create a great website, but it’s how they are giving back to the community that matters. Your client may want to see what they are doing with your own eyes or from the eyes of someone they trust, to ensure their dollars are being put to good use, so always be sure to suggest this tip to them before they commit to donating.”

C:\Users\haly\AppData\Local\Microsoft\Windows\INetCache\Content.Word\4.png
  1. Check the CRA’s Dedicated Database

Mark Blumberg of Smart Giving offers up another important tip for ensuring legitimacy. In a blog post outlining sources of information on Canadian charities, he offers up the tip to investigate the charity on the Canada Revenue Agency’s (CRA) Charities Directorate database, which contains each and every registered charity in Canada. You can use the official CRA charities listing to know whether an organization is a registered charity, but keep in mind that this database is limited to housing the last five years’ worth of information on registered charities.

Resources to Put You on the Right Track

Joanna also offered up a few valuable resources for advisors and donors looking to complete their due diligence when it comes to charity research.

“Toronto-based charity lawyer Mark Blumberg runs two of the best sites out there when it comes to all things charitable giving. Whether you’re just starting out on your philanthropic journey or you’re a seasoned veteran, Charity Data and Smart Giving are highly valuable resources. Charity Data gives you the chance to discover charities through filtering by cause, keyword, name, program, category, city, and province—allowing you to efficiently narrow down your search. Smart Giving, on the other hand, provides users with a blog-style format that discusses everything from the best ways to donate to charity, to how to avoid charity scams.”

Three Red Flags to Watch For

Now that we’ve covered some tips to increase your confidence that a charity is legitimate, let’s dive in to some more obvious signs the charity may not be what it says it is.

  1. Forceful and Aggressive Sales Tactics       

A legitimate charitable organization should never make you or your client feel uneasy. A reputable charity will respect your giving decisions, even if you opt not to donate with that particular organization.

If the charity is using belligerent tactics in an effort to get your client to donate, it’s often better to be safe than sorry, and find another cause or organization to give to.

  1. Holding a Similar Name to a Popular Charity

Hoax charities will occasionally utilize names that sound a lot like well-known, reputable charities to prey on and confuse donors, who may believe they are giving to the respected organization.

Beware of this common scam, and circle back to the above tips to ensure legitimacy if you’re feeling wary.

  1. Requesting Cash Only

This is among one of the most significant red flags a “charity” can display—with the prevalence and ease of electronic payments in this day and age, there is no reason an organization should be requesting cash payments only.

Legitimate charities will offer a range of payment options to be mindful of their donor’s preferences and safety.

How Bloom Can Help in the Giving Journey

If you’re seeking further advice, look no further than Bloom Investment Counsel, Inc. We are pleased to work with our clients’ advisors and assist clients to ensure that they have sufficient cash flow from their investments to use for their charitable endeavors.

Building Wealth and Cash Flow

Creating stable, consistent cash flow with your investments is hard. Bloom Investment Counsel makes it easier. 

We are your partners in wealth building providing stable, consistent income solutions for your financial peace of mind. Our committed goal is to help ensure your money is working for you, and not the other way around. 

Custom Solutions

Bloom Investment Counsel is delighted to work directly with our clients’ attorneys and advisors, including family office  and multifamily clients, providing custom, personalized solutions to help each client reach their unique diversification goals in a manner that best suits them. Continue making an impact in your community, and leave the legwork to us!

Income and Tax Strategies

Bloom is pleased to assist wealthy individuals, foundations, corporations, institutions and trusts in achieving financial independence by drawing upon a myriad of income and tax strategies—skillfully capitalizing on the wealth of returns produced in the form of three major income streams – dividends, capital gains, and interest income. Our methodology has worked for countless clients—we proudly have over 35 years of experience under our belts, and have managed over $2.5 billion in assets.

How to Contact Bloom

Contact Bloom at info@bloominvestmentcounsel.com or visit us at www.bloominvestmentcounsel.com to learn more about the ways in which you can experience financial freedom with multiple, steady, and reliable income streams.


Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing customized, actively managed, Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.

Founded in 1985, Bloom has experience in managing in excess of $2.5B in assets over the years. We believe that generating independent cash flow is central to the success of our clients’ portfolios because it provides capital for the present day, if needed, while continuing to preserve and build wealth for the future.

Follow Bloom Investment Counsel, Inc. on LinkedIn to stay up to date on our most recent articles.

This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

Leave a Reply

Your email address will not be published. Required fields are marked *


© 2022 Bloom Investment Counsel, Inc. All rights reserved. E & O E.

Powered by W3Schools