Sector on alert as sophisticated scams target NFPs

Paul Ramsay Foundation (PRF) has released a statement confirming that scammers were purporting to represent the foundation while asking charities to pay a fee to be considered for grants.

This is something that the foundation would never do, the statement said.

“We’ve been notified of several instances where charities, community organisations, and university researchers have been contacted by people who claim to be seeking project proposals for private philanthropic foundations, including Paul Ramsay Foundation,” the PRF statement said. “The agents offer help with developing an application, for a fee.”

One of the targets of the scam, Stephen Foxworthy, told the Community Advocate, “It was a bit frightening to me how successful the initial pitch was, even if the follow-up was a bit robotic. It certainly signals that this sort of approach will only get better, more compelling, and harder to distinguish from legitimate offers of support.”

PRF reminded potential grantseekers that it never uses third-party organisations or individuals to approach potential grantseekers. “Official correspondence [purporting] to be from PRF will come from a legitimate @paulramsayfoundation.org.au domain,” the statement said.

The scammers use known names and prominent philanthropy organisations to trade on the legitimacy of those people and entities. PRF said there was no indication that these individuals and organisations were aware that their identities had been fraudulently used.

Foxworthy, a board member with Minus 18, a youth mental health and LGBTQIA+ charity – and also the director of managed services for SmartyGrants (a sister organisation to Community Directors, publisher of the Community Advocate) – was among those who reported the scam to the Paul Ramsay Foundation. 

He said the initial approach was very sophisticated, convincing and attractive.

“I got an email from a guy in the US purporting to be an investment lead working on a private round for an Australian philanthropic org that matched Minus18’s purpose,” Foxworthy said.

“It seemed like a great match – well researched, exact match of impact, etc – so I replied saying we’d love to be involved.”

Foxworthy’s suspicions were aroused when subsequent communications consisted only of impersonal emails, and alarm bells really went off when the scammers proposed an “exclusivity agreement” in exchange for access to a private funding round . When he made it clear that his organisation would never pay an intermediary a fee while seeking funding, the communications stopped immediately. 

“The approach was noteworthy for a few reasons,” he said. “It targeted philanthropy and fundraising folks in charities with a very relevant pitch, and drafted specifically to reference the purpose and impact area of the charity, so very likely to get immediate response. 

“It also made the AI automation seem reasonable, because it appeared to be vetting potential partners as part of a process ,so I was able to shrug off the bot language, and it did a good job of having enough of a carrot to keep you hopeful as the alarms started ringing.”

However, targeted questions to the scammer resulted in vague AI-driven responses that made it clear that there was no promise of access to a private funding round, fee or no fee. 

“Oh, what a scammy fishing expedition,” he thought, before immediately alerting PRF and the US-based Cleveland Foundation executive whose name had been used in communications.

PRF’s statement outlined other examples of scams attempted in the foundation’s name:

• An agent claiming to be a specialist from Omidyar Network (a legitimate foundation) offered to help with applications to the so-called “Paul Ramsay Foundation – Digital Innovation & Blockchain Research Programme” in exchange for payment.
• An agent using the pseudonym John Appleton, “working on behalf of” PRF, offered an introduction to an “alignment agent” called Sammy Clarke to help facilitate access to a grant, for a significant fee. 
• An agent using the pseudonym Linda Tobey Jensen, who claimed to work on behalf of Global Hezzor Grants Foundation (a legitimate foundation), also claimed to have a relationship with PRF and offered help with grant applications in exchange for payment. 

All were scams, PRF confirmed.

Philanthropy Australia has also gone public with scam warnings, reminding “funders and grantseekers to remain vigilant.”

“We’ve recently become aware of scams targeting not-for-profit organisations through fraudulent approaches claiming to represent philanthropic funders,” a Philanthropy Australia LinkedIn post said. 

“These approaches may promote fake grant opportunities or request payment to prepare or submit funding applications.

“If you receive an unexpected approach, particularly one involving a request for payment, verify it directly with the organisation before taking any action,” it said. 

Philanthropy Australia asked anybody targeted by the scammers to let them know at marketing@philanthropy.org.au. NFP leaders who might have been targeted by scammers claiming to be working with or for the Paul Ramsay Foundation are asked to contact hello@paulramsayfoundation.org.au.

More information

If these scams have you wondering how your organisation can better protect itself, register now for Community Directors’ upcoming webinar on cyber threats, AI governance and the board’s role in managing these risks. It’s on Thursday October 8.

Find out more.