I’ve always been a giving person. My mom would say too giving. She would often worry that I was giving away so much that I wouldn’t have enough for myself. I have found that often those with the least to give are the ones that give the most. Many times I’ve found myself on a GoFundMe page looking at dozens of $5 and $10 donations. Those are the ones that really stay with me. I know they don’t have that $5 to give and it touches my heart when I see that kind of heartfelt giving. Maybe that’s why it’s so important to me that non-profits are wise when it comes to managing donations. That lover of animals that donated their $10 lunch money to the Humane Society fundraiser donated with the intent of having their hard-earned money go towards feeding a hungry dog or buying a blanket for a scared cat. With numerous organizations to choose from, it can be challenging, but not impossible to determine which are truly committed to their cause and which might not be as reliable or transparent. To help you make informed decisions, I’ve made a list of five essential tips to assess the heart of a nonprofit.
5 Tips to Determine a Nonprofit’s Legitimacy
- Examine Their Transparency: A trustworthy nonprofit will be transparent about its mission, goals, and achievements. They should readily provide information about their programs and finances. Look for clear evidence of their impact and check if they share regular updates and reports through their website or newsletters.
- Check for Registration and Licensing: Legitimate nonprofits must be registered with federal and state agencies. In the U.S., for example, check if the organization is registered with the IRS as a 501(c)(3) entity. This registration ensures that the nonprofit meets certain regulations and standards.
- Review Their Financial Health: Financial health is crucial for organizational sustainability. Analyze their financial statements and annual reports, available on their website or upon request. Check how they allocate funds, and ensure a substantial portion is directed towards their programs rather than administrative expenses.
- Look for Board of Directors and Leadership Information: A robust nonprofit will have a diverse, qualified board of directors and leadership team that guides the organization’s strategic direction. Their backgrounds and expertise should be publicly accessible and align with the nonprofit’s mission.
- Read Reviews and Feedback: Search for reviews, testimonials, and feedback from donors, volunteers, and beneficiaries. Websites like GuideStar and Charity Navigator feature reviews and ratings that can provide insight into the organization’s reputation and effectiveness.
5 Resources to Help You Verify a Nonprofit
- GuideStar (www.guidestar.org): GuideStar provides detailed information on nonprofit organizations, including their IRS status, financial documents, and program results. It’s an excellent resource for an in-depth look at a nonprofit’s operations.
- Charity Navigator (www.charitynavigator.org): This resource offers an assessment of nonprofits based on their financial health, accountability, and transparency, providing ratings that help donors make informed decisions.
- Better Business Bureau’s Wise Giving Alliance (www.give.org): The BBB’s Wise Giving Alliance evaluates charities based on standards of accountability that cover governance, effectiveness, finances, and solicitation materials.
- IRS Tax Exempt Organization Search (https://apps.irs.gov/app/eos/): Use this tool to verify the tax-exempt status of any U.S. nonprofit. It confirms whether an organization is eligible to receive tax-deductible charitable contributions.
- Charity Watch (www.charitywatch.org): Charity Watch offers an analytical approach by providing ratings based on the cost-effectiveness and efficiency of organizations, helping you to identify nonprofits that handle donations responsibly.
By taking the time to do your research with these tips and tools, you can ensure your donations are going to a deserving and effective nonprofit. Your diligence not only protects your investment in social good but also contributes to a greater impact on the causes you care about. Remember, informed giving is effective giving!