Hearts Open, Wallets Taken: The Cost of Charity Fraud

It began like many donor stories do—with a heartfelt email and a promise of support.

A colleague forwarded me a message from a man named Mike Clifford. He and his wife, Marie, expressed interest in making a $2,000 donation to our organization. The tone was warm, the intent generous, and the request simple: could I walk them through the process of giving?

As a fundraising professional, I’ve had countless conversations like this. But what unfolded over the next few weeks was not a story of generosity—it was a sophisticated scam attempt that nearly compromised our organization’s financial integrity.

The Setup: A Seemingly Sincere Gift

Mike’s emails were polite and professional. He referenced annual giving, a financial advisor, and a preference for mailing a paper check—all details that lent credibility. He asked for our mailing address and tax ID number, which I provided, along with a thank-you message and an offer to connect with him to determine how they would like to direct their gift and an open invitation to support our current Simulation Lab campaign.

A few days later, he followed up with tracking information for the check and asked for a phone number in case his advisor had questions. Everything seemed in order—until the check arrived.

The Red Flag: A Check That Didn’t Match the Story

The check was made out for $20,000, a much larger amount than the $2,000 originally promised. I was so excited to have a new major donor and was proud of the cultivation that had led to this gift. I wrote Mike back to let him know that I wanted to confirm the amount of the check was what he intended, as I had expected a check for $2,000. 

Something didn’t feel right.

The check that arrived was issued from a business account from a Pawn Shop in Alabama—a detail that immediately raised concern. We always save the envelopes, and it had a return address from a shipping company in Michigan. We were located in Iowa and why would someone from Alabama want to support us? Maybe Mike was the parent of a former resident or former patient perhaps?

I paused. Before depositing the check, I waited to hear back from Mike to confirm the amount and ensure no mistake had occurred. His response was vague: he was out of town, couldn’t access his financial records, but encouraged me to deposit the check anyway and send a copy of the deposit confirmation.

That’s when the alarm bells rang. Something felt off.

The Response: Steps Taken to Protect the Organization

Then came the follow-up email from Mike, stating he had received confirmation that the check had been delivered and asking for a deposit confirmation. That was the moment the red flag turned crimson.

I immediately asked our business manager to hold the check. I notified our corporate office and requested guidance on whether to deposit it. But I didn’t stop there. I looked up the business name on the check and called them directly.

The person who answered had never heard of anyone named Mike Clifford. Then the owner came on the line. As I began to explain why I was calling, he interrupted: “It’s a scam.” Someone had stolen their bank account information, printed fraudulent checks, and already succeeded in scamming two other charities—one for $4,000 and another for $20,000. I was at least the third target.

My heart went out to this small business owner. I sent him copies of the correspondence I had received and wished him well. I also confirmed that we would not be depositing the check—one that was sure to bounce.

The Pattern: A Classic Overpayment Scam

This scam follows a familiar pattern. A fraudster sends a check for more than the agreed amount, then asks for a refund or confirmation before the check clears. By the time the bank flags the check as fraudulent—often days later—the organization may have already sent a refund or shared sensitive information.

In our case, the scammer never asked for a refund directly. But the request for a deposit confirmation and the urgency to process the check were clear indicators of manipulation.

The Risk: Why Nonprofits Are Vulnerable

Nonprofits are built on trust. We welcome generosity, respond quickly to donor inquiries, and often operate with lean teams. That makes us ideal targets for scams that prey on goodwill and urgency.

Scammers are becoming more sophisticated, using real names, plausible stories, and even tracking numbers to build credibility. They often impersonate donors, vendors, or even board members.

The Response: Due Diligence and Internal Safeguards

Fortunately, our team followed protocol. We flagged the check, alerted our finance department, and reported the incident. No funds were lost, and no donor or Foundation data was compromised.

But the experience was a sobering reminder: even seasoned professionals can be targeted—and nearly fooled.

The Takeaway: How to Protect Your Organization

Here are a few lessons we learned—and that I hope others will take to heart:

• Verify unexpected gifts. If a donation seems unusually large or inconsistent with prior communication, pause and confirm.
• Communicate daily with your gift processers. Important members of our team do more than just deposit checks and record them in our database. Keep them in the loop for gifts you are expecting so they are not left in the dark and can help protect our organization.
• Be cautious with vague or evasive language. Scammers often avoid specifics and create urgency. Be cautious with donors who avoid a phone call or personal conversation.
• Watch for mismatched details. A personal gift coming from a business account—especially a pawn shop—is a red flag.
• Train your team. Ensure staff know how to spot phishing, spoofing, and scam tactics.
• Work closely with finance. Establish protocols for verifying and depositing large or unusual gifts.

A Growing Threat to Philanthropy

Charity fraud is not a fringe issue—it’s a growing threat to the integrity of the nonprofit sector. In recent years, scams targeting donors and organizations have surged, with imposter schemes alone accounting for over $2.7 billion in consumer losses annually, according to the Federal Trade Commission. The Better Business Bureau estimates that more than $10 billion is lost each year to fraudulent charitable solicitations. As scammers become more sophisticated, exploiting crises and mimicking legitimate giving behaviors, it is imperative that philanthropy professionals remain vigilant. My experience was one of many—and while we avoided financial loss, at least two other organizations did not and a small business in Alabama is going through a living nightmare that could put them out of business. This underscores the need for stronger safeguards, cross-sector communication, and ongoing education to protect the generosity that fuels our missions.

Conclusion: Trust, But Verify

Philanthropy is built on relationships, and most donors are exactly who they say they are—generous, thoughtful, and sincere. But as stewards of charitable resources, we must balance openness with vigilance.

This experience reminded me that protecting our mission means protecting our processes. And sometimes, the best gift we can give our organizations is a healthy dose of skepticism.