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Will NYC charity fraud hurt donations?

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Steve Chiotakis: Well, it’s the time of year when charity groups ramp up efforts to raise a whole lot of money. But New Yorkers may be in less of a giving mood after some news this week. The New York Attorney General is suing a well-known group that claims to raise money for the homeless. Marketplace’s Amy Scott reports.

Amy Scott: New Yorkers know the pitch well. A man or woman in a red apron stands at a card table with a giant water jug, collecting for money for the homeless.

UHO Worker: Pay one penny. A penny a penny a penny. Help make a difference.

But New York Attorney General Andrew Cuomo announced this week that the United Homeless Organization is a fraud. Cuomo says the group doesn’t provide any actual services to the homeless.

Collectors pay a fee to rent the table. They get to pocket any donations. Cuomo says the group’s bosses use the fees to fund personal expenses, like Weight Watchers bills and splurges on the Home Shopping Network.

Mary Brosnahan directs the Coalition for the Homeless. She says the news could have a chilling effect on donations to legitimate groups.

Mary Brosnahan: It’s always a concern when there is some scandal uncovered. But I think that folks in the know are savvy enough to go to Web sites that actually rate charities and they can tell you where your money’s actually going to.

Brosnahan says giving has held up in the recession. But she says the need is greater. Her group says the number of homeless people in New York City shelters has hit an all-time high.

In New York, I’m Amy Scott for Marketplace.

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