When was the last time that you were paying for your groceries or other items, and the cashier asked, “Would you like to round up your total for charity?” Perhaps they didn’t tell you which charity. Or maybe they simply asked, “Would you like to round it up?”

That’s what “Sylvia” and her mother encountered at a home decor chain store that sells bedding, kitchenware and holiday goods.

“After all of our items were rung up, my mom paid in cash, and then the cashier said, ‘Would you like to round it up?’ Mom said, ‘Sure, no worry. There is a shortage of pennies. That’s fine. We don’t need them.'”

“At home, we were reviewing the receipt and saw that the last entry was a 32-cent payment to St. Jude (Children’s Research Hospital). Totally unexpected! We had made a charitable donation without realizing it.

“We don’t object to the donation, but we feel we were misled because we weren’t informed where our money would go and therefore didn’t give our consent.

“I think this is something you might look into, Mr. Beaver. How widespread a practice is this?”

They were indeed misled

Sylvia is right. They were misled, and with Sylvia on the line, I confirmed it by speaking with the on-duty manager at the store, asking her, “Do you have a charity campaign for St. Jude?”

“Yes, we do.”

“Do your cashiers tell customers that ’rounding up’ their total means that their change goes to St. Jude? Or do they just say, ‘Would you like to round it up?'”

She refused to answer but insisted that Sylvia tell her who the cashier was. “Give me the register number on the receipt.”

I repeated my question, which she still didn’t answer. I took her refusal as an admission that, yes, cashiers ask customers if they want to round up their total without letting them know where their money will go.

Of course, who can forget the past few years of constantly being bombarded with “Would you like to give a dollar to XYZ organization?”

But we don’t hear that much anymore, because “checkout charity” has been replaced with the “round it up” verbiage.

Perfect example of impulse giving

America is a generous nation. If you look at the Charities Aid Foundation’s World Giving Index, the United States ranks near the top of countries whose citizens are among the most generous on the planet.

Now, there is giving when you know where your gift is going and you want to donate, but snookering us to give even a few cents to an unidentified cause is more than not acceptable. It is generally considered illegal to solicit charitable donations without revealing the name of the charity and the purpose for which the funds are being raised.

Both federal and state laws require transparency in charitable solicitations to protect the public from fraud.

And when it happens at the checkout counter, the customer has only seconds to decide.

In any other business or commercial setting, we would say, “Wait a minute, I have some questions.”

But when people waiting behind us in line are close enough to hear our conversation with the cashier, the result is pressure — you are being pressured to give your money (i.e., make a buying decision with no time to think it over) to an organization that might not have been identified.

After asking if you’d like to donate, the cashier should say, “And your donation goes to XYZ.”

But that’s not always so, according to the 2025 Charity Checkout Champions Report by Engage for Good and presented by Adyen, which analyzed 92 point-of-sale (POS) fundraising campaigns that raised over $275 million in 2024. The report found that only 74% of the campaigns clearly identified the benefiting charity.

I spoke to an executive of one of the North American companies that helps businesses collect donations for charities at checkout. He asked that he and his employer not be identified because the information he shared with me is more frank than his employer would prefer. Once I promised not to share his identity, he was quick to admit:

“We show cashiers how to seize on a customer’s psychologically weak moment, when their donation could be going to a group they might not approve of and would never give their money to.

“But impulse giving is huge in the charity business, and so your very presence in the checkout line lends itself to being pressured into making a split-second decision for an altruistic reason.

“Unless full disclosure is made about the recipient of the donation, this is highly unethical, but (businesses get) away with it all the time.”

Findings on impulse giving

Fifty-three percent of Americans donate impulsively at the checkout counter, according to a 2024 survey conducted by Binghamton University researchers. They found:

• Impulse giving is often driven by social pressure, emotional appeal and the ease of the transaction.

• The donation request is embedded in a moment of financial exchange, making it feel like a small, convenient act of generosity.

• Many consumers report feeling guilty or obligated when prompted, especially in face-to-face retail settings.

• Younger customers are more likely to give impulsively than older people.

What businesses should do

The executive I spoke with offered these suggestions to help retailers that adopt checkout-charity programs do everything correctly and steer clear of trouble:

1. Name and describe the charitable organization.

• The name and purpose of the charity should be clearly displayed at the checkout

• You should verify that it is recognized by the IRS as a 501(c)(3) nonprofit

2. Provide an explanation for how customers’ funds will be used.

• Include administrative or processing fees

• Break down how much goes directly to the cause

3. Ensure funds are given voluntarily and that informed consent is obtained.

• Your workers should make it clear that the donation is optional

• Customers should be told that they can decline

• Your workers should not use language that invokes pressure or guilt

The executive concluded our interview with these cautionary words for retail businesses: “Checkout charity is highly effective, and at the same time, we are hearing more and more objections to the pressure to donate. My fear is this has the potential to backfire one day.”

All that said, checkout charity isn’t a bad thing when it’s done right. According to a Charity Watch blog, checkout donations allow charities, especially smaller ones, to raise significant amounts of money from a much larger pool of donors than they could normally reach. And because the process is part of a transaction that’s already being conducted, the fundraising expenses are much lower.

So the bottom line here is that shoppers should make sure that they are aware of what they’re donating to before they hand over even a small donation at the checkout. Here’s what you can do if you encounter a request to round up your total:

• If the cashier isn’t clear about what the money will be used for, ask.

• Don’t hesitate to ask further questions about the charity. Maybe it’s one you’d be happy to support.

• If you’re not interested or feel there isn’t enough information available, simply and politely say, “No, thank you” or “Not today.”

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers,
which may be faxed to (661) 323-7993,
or e-mailed to Lagombeaver1 – at – Gmail.com.

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We recently hired “Roger,” who is a partner in a large law firm, to handle our small, educational foundation. His firm’s website and LinkedIn states that he has a Master’s in Taxation and represents charities and tax exempt organizations.

Our Articles of Incorporation allow us to send college students majoring in mechanical engineering to a German university for an intensive summer program in addition to improving their German. COVID made travel impossible and the $125,000 in our foundation’s bank account is just sitting there, unused.

So I phoned Roger, and asked if we could donate some of these funds to organizations that help refugees from Afghanistan and still maintain our charitable tax exemptions. We spoke for less than a minute. He said, “Let me do some research on this.”

His bill just arrived and we went insane. He charged $85 for that one minute phone call and close to $800 for himself and his paralegal for two hours of ‘research’ one day and over an hour ‘reviewing’ it and ‘documents’ the same day!’

I Googled our question and found the answer in less than 5 minutes!  The senior partner in his firm told me, ‘Roger said that he had to spend this time researching your complicated issue.’

“I asked to be sent copies of his research and the documents he reviewed but have received nothing.

Shouldn’t an attorney who holds himself out as working with tax-exempt organizations know the answer to that question already? Also, don’t I have the right to copies of his research and documents, if they exist at all, as we’re billed for them? What do you think about this?

— Hans

Should indeed know the answer 

I ran this question by Los Angeles attorney William M. Ramseyer whose law practice concentrates on charitable organizations. When I told him what Roger said about having to do research, he replied:

“What research? A lawyer with a Master’s in Taxation who claims to handle tax-exempt matters knows this stuff! We get the same question all the time. He lied to the client and his senior partner. This is bill padding and is illegal.

“Hans should have immediately been told, ‘There is a huge difference between sending students on educational trips and donating money to refugee organizations. You are facing legal and accounting fees that could use up much of your foundation’s money! Be patient. We will all be able to fly again.”

With that as a background, for anyone thinking of starting a charity, or changing the goals and mission statement of your organization, Ramseyer offers recommendations on what needs to be done, beginning with your Articles of Incorporation.

When the articles do not allow for other charitable purposes

“Your readers’ articles had a narrow, specific purpose. This is one of the most common, preventable, and costly errors. If they do not permit funds to be used for other related, charitable purposes, then the cost of changing the organization’s goals can be expensive.

“A new application to the IRS and your state agency — such as the Attorney General — would most likely be required.”

Understand how assets must be used

“Your assets must be dedicated to the specific purpose described in the articles. Any other use is considered a breach of the charitable trust,” he points out.

So, to avoid problems down the road:

(1) Describe your charitable purposes broadly enough to cover related activities you may want to do in the future.

(2) If your articles are too specific, state agencies will likely require that all of your current funds be segregated from new donations and used exclusively for the older purposes.  Only newly raised money can be used for the expanded goals.

(3) You must hire a CPA to set up parallel accounting systems.

(4) A good idea would be to have your books audited every year to prove you were following the segregation.
 
(5) Realize that the cost can easily run into the tens of thousands of dollars.  This could consume a large portion of the funds intended for charitable purposes.

“Dennis, an honest lawyer would have immediately told this couple to stick to their original purposes, as we will all be able to fly soon. Fraudulent billing is a common practice in many large law firms. Your reader’s gut instinct was right.”

Bill padding

Los Angeles-based Attorney Fee Arbitrator Aaron Shechet commented:

“While it is often necessary for lawyers to research areas of the law about which they may be unsure, I would disallow all aspects of Roger’s bill that involved legal research for something he clearly must have already known based upon his academic training and law practice which includes tax-exempt organizations. Additionally, his client has a right to that research, and a failure to provide it is telling.”

Los Angeles-based Stan Goldman, Loyola Law School Legal Ethics Professor, provided this analysis:

“When presented with a simple question that any expert could have answered without doing research, charging for it is plain wrong. It is bill padding. Clearly, in that brief phone call, Roger could have answered the question and charging $85 would be have been reasonable, but nothing more.” 

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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For some business owners, “The American Dream” is more than the freedom to achieve prosperity. To these entrepreneurs, it is the ability to have a real impact on individuals in meaningful ways. Often, they accomplish these goals by starting some kind of 501(c)(3) non-profit, tax-exempt charitable organization.

That’s what “Karl” wants to do:

“I am a Swedish-American from the small ‘Swedish’ town of Kingsburg, California. I am now living in a large, Midwestern city, where I met and married my lovely wife who is from the south of France.

“We want to create an educational foundation offering travel/study scholarships for high school students with Swedish ancestry who are taking French classes. They would travel to Sweden over the summer, spending a month, then, on to France, studying at a language immersion school and living with families.

“French high school students would be invited to the U.S. over the Christmas holidays where they would stay in American homes, and, of course, speak only English.

“We would finance this and ask for contributions from groups or schools in France and Sweden.

“Our accountant says that all we need to do to get started is to create a non-profit corporation and can solicit tax-deductible donations immediately. What is involved in setting up a foundation? Do you feel our idea is feasible?”

What Kind of “Foundation”?

We ran Karl’s question by attorney Jeffrey Haskell, Chief Legal Officer at Foundation Source, based in Fairfield, Connecticut. It is the nation’s largest provider of support services for private foundations.

“In states where fundraisers are required to register before soliciting the public at large, a charitable organization that fails to do so may face stiff penalties and incur severe reputational damage that can be difficult to repair,” Haskell explains. “Indeed, some states publish public lists of organizations that are delinquent.”

“Your reader says he wants a ‘foundation,’ but he needs to decide if he wants to set up a private foundation or a public charity. Although both private foundations and public charities might have the word ‘foundation’ in their name, and both are classified as tax-exempt, 501(c)(3) organizations by the IRS, they have a major difference: the source of their funding.

“Whereas a public charity, like The Make-A-Wish Foundation, gets its funding from the general public, a private foundation, like The Bill and Melinda Gates Foundation, derives almost all of its support from an individual, family, or corporation,” he explained.

Not a Piece of Cake

Having charitable ideas and goals are one thing, but fund raising–finding the money to turn the couple’s wish into reality–is something quite different, as I learned.

“If they established this organization as a public charity, they would need to register in every state where funds are actively solicited.” Haskell points out. “They would also need to constantly be fundraising to maintain their status as a public charity.”

Of course, that’s a lot of work, and he suggests that establishing a private foundation might be a better alternative.

“If they are personally able to provide most of the funding, a private foundation would be an ideal choice because it would eliminate the fundraising hassles while enabling them to be hands-on and to make decisions about who receives the awards.”

Suggestions for Pursuing Either Option

While the many considerations around establishing a private foundation or public charity are beyond the scope of today’s story, Haskell provides some important guidance for those who want to establish either a private foundation or public charity:

–Perform a needs analysis. Is there a need for what you want to do, or is it already being addressed by another organization? If so, can you partner with them?

– If you decide that it is a “go,” retain a lawyer who specializes in charities and non-profits or a firm that establishes and manages private foundations. Because tax-exempt organizations are subject to strict regulations, it takes knowledge and careful oversight to remain in compliance.

––Carefully define your charitable purpose. Whether to help focus your own grant-making or to explain your organization’s mission to potential donors, you’ll need a clear mission statement.

–File for 501(c)(3) Tax-Exempt Status with the IRS.

–Draft a business plan that details how your organization will function.

–Recruit the most qualified people you know for your board of directors.

“Both private foundations and public charities have enormous social and economic impact. Understanding the operational requirements, compliance considerations, and philanthropic capabilities of each can help individuals choose the right type of organization for their needs and abilities,” he concludes.

Do Not Expect Donations from France or Sweden

Expecting donations from France and Sweden could be flawed when seeing where those countries rank on The World Giving Index which evaluates worldwide charitable giving.

Indonesia was first; the U.S. came in as 4th.

Sweden earned 42nd place. France – 72nd place.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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“Nicky” (not her real name) is a television reporter in the Southern San Joaquin Valley with a heart of gold. Brilliant at her craft as a journalist, you just stay glued to her news stories as she finds that human touch few others in TV seem to capture.

Her mother’s death of cancer left Nicky with a sense of duty. “As mom taught high school for over 35 years, I felt an obligation of using my position as someone known in the community to raise money for high school girls living in poverty,” she explained during a phone call.

“So, Dennis, I am collecting money for this project, which I have named after my mother. The funds will buy clothing, school supplies, help pay for bus fare, things like that. Can you give me $100?”

As a group, lawyers are pretty generous, so it wasn’t the money that stopped me, but since I knew Nicky–and the consequences to her reputation of illegal fund raising–I asked a question, and it’s an important one that you need answered if someone out of the blue solicits a donation.

Tempe Arizona-based Ellis McGehee Carter of the Caritas Law Group outlines the important legal issues–and questions–anyone wanting to fund raise must understand and be able to answer.

She exclusively represents nonprofit, tax-exempt and mission-based businesses with corporate, tax and regulatory matters, as well as donors with respect to major gifts.

Starting a non-profit is more complicated than most people ever imagined.

“One of the great things about our country is this amazing spirit of generosity, of wanting to support all kinds of charitable causes. But most people do not realize that starting your own non-profit or charity is far more complicated than they could ever imagine.

“You are running a business, which, to prevent fraud on the public, must satisfy several legal and regulatory conditions required by each state and the Federal Government. In general, operating a not-for-profit is far more complicated than running a private, for-profit business, and the headaches can be greater.

“Dennis, I’ll bet you asked if Nicky’s charity was an IRS approved 501(c) (3) charitable organization and was registered with the State of California, which your state, like most, requires.”

That was exactly what I asked, and when hearing that she had done none of this, I told her:

“Please listen to me. It’s a noble idea, but you can’t run around asking people to give you money unless you have complied with the law. You are in the public eye and have something to lose! All it takes is for one jealous co-worker at your TV station to report you to the California Attorney General and you can kiss your career good-bye. Why haven’t you complied with the law?”

News people are rarely naive, but she was. “Oh, a friend heads a group that is a 501(c) (3) and does exactly what I am doing, helping poor high school girls. They have been working with me for a year to establish my 501(c) (3),” she replied.

For a year? Something’s wrong. It doesn’t take that long, and besides, why would a group that does the very same thing want to empower a competitor? Didn’t that seem strange to Nicky? And if they were a proper 501(c) (3) then they would have told her to not solicit money until she was legit!

She didn’t like hearing that, nor appreciated the fact that I was trying to help to steer her clear from legal trouble. As I felt she had honest intentions, I offered her the $100, but she refused and hung up.

No experience? Then work with a Fiscal Sponsor

“We often receive calls from people who have a charitable idea but lack any experience in the complicated world of non-profits. For them, we urge working with a Fiscal Sponsor–which is a fully registered, legally compliant non-profit–so they can test their idea before building an entire infrastructure,” Carter states.

“The Fiscal Sponsor will collect funds which may only be spent for your charitable purpose. The funds are tax deductible, so donors benefit. After a year or so, if it is clear there is support for the idea, which makes sense and fulfills a need, then they are in a better position to incorporate.

“Also, since they’ve legally raised money through the Fiscal Sponsor, funds will be available to get professional help to structure their charity properly.”

Be realistic about how difficult this is going to be

Concluding our chat, Carter offers these cautionary words to anyone looking to walk down the non-profit aisle. “Not everyone will share your passion, and fewer yet will contribute. Philanthropy is a tough business.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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