How do you know if a nonprofit is legitimate? Have you done your research, or are you donating your money on a hope and a prayer that it will make a difference within the community? We’ve come up with a list of things to check before you decide which nonprofit you want to support.
Defining a nonprofit
In simple terms, nonprofits are groups that are exempt from paying federal income taxes because their money goes towards helping the community. With that being said, nonprofits CAN pay people who provide services. Donations made to nonprofits are not 100% delivered back to the public. Unfortunately, they can’t be. Overhead costs that nonprofits endure are similar to for-profit organizations. They still have to pay for things like renting an office space and costs that come with organizing events.
One way to discover whether a nonprofit is considered highly rated is to see how the government looks at their contributions to the community. There are a number of websites that break down how a charity is using their funds to benefit the community versus the money they’re spending in overhead costs. Nonprofit explorer, Guide Star, and Charity Watch are a few of the websites to use to look up the charity that you are interested in supporting. Another fool proof way to determine whether a nonprofit is legitimate is to search for them on the IRS tax exempt website using their EIN number. An EIN number is assigned to a nonprofit when it is labeled official in the eyes of the government. If a nonprofit does not have an EIN number on their website, you should contact them and request it, it is public information. If they are unable to provide an EIN, then steer clear of their organization until they are legally established.
Questions to ask yourself before donating
While you’re searching through the websites of the charities that peak your interest, there are a few questions to answer for yourself. These questions should help you decide whether or not the charity is right for you to support!
- Are they documenting their community outreach with regular pictures and/ or live videos of events?
- What percentage of their income is going to employee paychecks?
- Can you volunteer time and goods with the nonprofit as well as money?
- Is their donation portal secure enough for you to enter your card information?
- Is their financial information readily available.. if not, why?
There are MILLIONS of organizations, but we wanted to provide you with a few nonprofits that we personally support, so check them out here.You want to make a difference in your community, but of course you don’t want to find your money getting wrapped up in a charity scam. We hope these tips help you to navigate the world of charities and nonprofits in a way that will allow you to support the ones that are truly giving back to the community.