How to Evaluate a Charitable Organization

Taking the time to do a simple check of the organization to which you want to donate can save you from making the wrong donation decision - and even from being a victim of fraud.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• IRS Forms
• Phone Books
• Phone Books
• Internet Access
• Bank Account
• Computers

1. Double-check the charity's name; similar names can be confusing. United Way is different than United Crusade or Another Way.

2. Use the charity's supplied contact information - often the executive director or development director - to call or e-mail the charity headquarters.

3. Ask the contact person whether the organization is designated by the Internal Revenue Service as both tax-exempt and qualified to receive tax-deductible donations (usually classified as a 501(c)(3) organization).

4. Ask the contact person how the charity carries out its mission, and review its recent accomplishments.

5. Ask the contact person what percentage of donation dollars go to the actual charitable purpose. (Industry watchdogs recommend no less than 60 percent.)

6. Ask for written literature about the charity and/or its Web site location.

7. Review the written materials for substantive facts, ignoring emotional appeals.

8. Request and review the charity's Form 990, an IRS form that shows its income and expenditures.

Tips & Warnings

• Never feel pressured into giving to any charity.
• As of June 8, 1999, all 501(c)(3) organizations, except private foundations, are required to send copies of their three most recent Forms 990 to anyone who requests them. If the request is made in person, nonprofits must provide copies of the forms immediately. If the request is made in writing or by fax or e-mail, nonprofits have 30 days to mail copies of the forms. (Charities may charge a "reasonable fee" for copying and mailing forms. Reasonable is defined by the IRS as $1 for the first page and 15 cents for each additional page.)
• Forms 990 are available online through the National Center for Charitable Statistics. (See Related Sites.)
• From a new organization that does not yet have a financial statement or annual report, the Council of Better Business Bureaus recommends that you request a budget and information about the charity's funding goals and proposed programs.
• For further assistance, contact the Philanthropic Advisory Service of the Council of Better Business Bureaus. (See Related Sites.)
• Be wary of door-to-door solicitors asking for donations. In many cases, a high percentage of the money collected goes to the solicitor, not the charity.

on 11/22/2005 The best that I have found is the American Institute of Philantropy (http://www.charitywatch.org/). This organization rates charities on a simple letter grade system like in school. There is a fee (tax deductible) to see all the grades, but I think it's well worth it.

Guidestar.com is a good site too to help evaluate charities.