How to Determine Which Non-profits are Legitimate

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A sad truth about nonprofits is that not all of them have the generosity and integrity you’d expect from a charitable organization. So how do you know which ones are legitimate? How can you be sure your money is being well-spent? Here are eight ways to sift through the scammers and choose a good, trustworthy charity.

1: Look At Their Fund Distribution

Not all of your donation will go directly to the cause. This is normal; charities have overhead expenses like any other business, and many also use donated money for further fundraising or awareness efforts. There’s a limit, however, to how much they should be siphoning from the real people in need. If they aren’t giving at least 60 or 70 percent of your money to the cause, they aren’t a very charitable charity.

2: Examine Their History

How long have they been operational? Who founded them, and who leads them now? If they aren’t tax-exempt, have they always paid their dues on time? Are there any complaints filed against them with charity watch organizations?

3: Read Their Reports

All charities should keep up-to-date annual reports that detail their finances, their board members and their mission. If you can’t find the information on their website, ask them for a copy; the biggest sign of an honest charity is a willingness to share everything with the public, because they should have nothing to hide.

4: Check The Registry

Almost all charities making more than $25,000 a year are required to register and share their financial information with the IRS. The exception are church charities, but sometimes they’ll go through the motions, too, for legitimacy’s sake. Small charities also enjoy a little bit of leeway, but even if they make less than $25,000, the IRS insists that they file names and incomes. Look for this information if you’re trying to decide if a certain nonprofit organization is legit.

5: Beware Pressure

Charities shouldn’t try to force you into making a donation. A certain amount of coaxing is inevitable, but if they’re pressuring, guilt-tripping or bullying you, they aren’t the upstanding pillars of the community that they claim to be.

6: Look For Real-World Activities

Some scam artists have taken to creating entirely fake charities. They’ll throw up a website, solicit donations and then pocket the resulting funds. To avoid being ripped off in this manner, run your charity through a search engine and see if there are any images, discussions or new articles about their real-world activity. For example, if you’re looking for verification that the Pan-Mass Challenge really exists, a quick look at the Timothy Broas blog will prove that he actually completed it.

7: Say No To Gifts

It isn’t uncommon for charities to offer things like stickers and key chains as thanks for your support. You should be concerned, however, if they try to give you anything more expensive. It might be a precursor to the charity demanding “reimbursement” for their goods, a shady tactic employed by unscrupulous organizations.

8: Ask For Additional Information

If you have any doubts about the honesty or authenticity of a charity, take your questions directly to the source. Seeing you as a potential donor, they should be more than happy to clear up your concerns. If, on the other hand, they act vague, rude or stand-offish, you’ll know to send your money elsewhere.