How to Make Sure a Charity is Legit

November 17, 2016

Giving back is one of the most gratifying things you can do with your money. From the feeling of doing good, to the tax (and other) benefits associated with your donations, charitable giving is positive in nearly every way. Unfortunately, some organizations—whether they’re criminal or incompetent—don’t take proper care with the dollars they receive. So what can you do to make sure your donations aren’t squandered? Here’s a quick guide to making sure a charity is legit.

Do Your Homework
At face value, most charities and other nonprofits seem like they’re well-run. But if they were all on the up-and-up, you wouldn’t be reading this, right?

A good first step when researching any charity is to visit the Colorado Secretary of State’s website and go to the “charities and fundraisers” section. There, you can figure out a very important facet of any legitimate charity: whether or not they’re registered with the Secretary of State. Any legitimate charitable or other tax-exempt nonprofit should be registered.

Even groups that were at one time registered can have red flags. If there was any doubt in your mind that charities can and do engage in dubious behavior, the current list of groups with suspended registrations is just shy of 2,800 (and that only goes back to 2009!).

After you’ve located the charity’s registration, check out their disclosure and financial statements. It might seem like a lot of work, but you don’t want to give to an organization that’s either wasting money, or isn’t in good standing with the state. You can also check out how efficiently they use contribution dollars, and even dive into their form 990s—an IRS disclosure form required from some nonprofits—to see things like staff salaries.

Google is Your Friend
Not every piece of information regarding a charity is going to come from their official government filings. Sometimes entities engage in behavior that, while legal, might turn you off as a donor. Traditional and new media outlets usually have the most current reports on charities potentially misusing donor dollars, or engaging in behavior you don’t feel comfortable supporting. You may also want to visit the charity’s social media page and see what people are saying (take it with a grain of salt, of course.)

Trust Your Gut
If it feels weird, too good to be true, or otherwise off kilter, your instincts are probably good. According to this great list of tips from the Secretary of State’s office, not only do many well-established charities avoid soliciting donations over the phone, but no legit charity will ever refuse your request for more information. Another area for potential fraud is entities posing as legitimate charities. If you receive any unsolicited communication, feel free to hang up or hit delete, and go to the charity’s website instead.

Another thing to keep in mind in the digital age: personal fundraising platforms like GoFundMe offer ways for people who are in dire need of help to leverage their networks for things like medical bills and other unexpected expenses. Be kind, but also be smart. If you see a personal plea from a stranger pop into your newsfeed, reach out to the person who shared it—while the need may very well be real, stories of people exploiting this method for their own gain are far too common. Also, keep in mind any donations to those kinds of fundraisers are not tax deductible.

Now that you’re informed and empowered, go forth and donate with confidence!