Legitimate Nonprofit? How Can you Tell

At DHM Media Group we love to support local nonprofits. We enjoy aiding them in marketing and event planning, working to increase profits that can be put toward the organization's mission. However, not all nonprofits have genuine motives. How do you know? If you are interested in donating to a nonprofit, or volunteering for one, we suggest you look into ways to know if it is legitimate and using its funds in a responsible and ethical way.

First, check the IRS database to see if the organization you are investigating is tax-exempt. There are some exceptions you should investigate if you find that the non-profit is not listed. 

An excellent resource for more detailed information is the Better Business Bureau Wise Giving Alliance. They organize charities alphabetically and then report on which of their standards an organization does or does not meet, its tax status, and a financial report detailing where the organization is allocating its funding. This information is useful because you may think twice about a group whose CEO seems to be bringing home a whole lot of bacon. I find this site to be the most user-friendly, though the others are no less comprehensive. 

Two reputable sites to search for additional information are Charity Navigator and GuideStar.

According to Charity Navigator, its rating system is as follows: 

“We rate charities by evaluating two broad areas of performance; their Financial Health and their Accountability & Transparency. Our ratings show givers how efficiently we believe a charity will use their support today, how well it has sustained its programs and services over time and their level of commitment to being accountable and transparent.”

GuideStar remains more neutral, lacking the 4 star rating system Charity Navigator has. It presents information about charities, most notably their most recent tax forms filed with the IRS. 

All of these resources have the fundamental goal of advocating for nonprofit transparency and accountability. While they do a lot of the leg work for you, do your due diligence as well, and be a responsible donor. 

Aside from the research you can do on these various websites, there are some basic, blatant red flags to look for. First, check out the address of the charity you are investigating. Is there one, and is it a legitimate location? Next, look into the nonprofit's name. Oftentimes, fraudulent groups utilize a name very similar to a legitimate organization. If an organization is already asking you for donations, be wary of groups that claim to need funds immediately. Groups that are illegitimate stress urgency and try to thwart your ability to research the organization in advance.