People naturally get upset and concerned when they hear stories about how a charity has misused donated money. It makes them cautious and wary about gifting to organizations with which they are not fully familiar. Is there a way to check into a charity and see if they are legitimate and using donated funds appropriately? Absolutely. A little known website, www.guidestar.org, provides an extensive amount of information about 501(c)(3) non-profit charities. Their home page has a search box where you can enter the name of a charity.
GuideStar has a premium report that includes more information at a cost, but there is plenty of free information for most people to make a decision. To get the free information, you need to create an account by clicking on “My Account” and then filling out the information under the “New Customers” section. It is a very simple process. Once you have an account and are signed on, just type in the name of the charity in the search box. The first page of the GuideStar report on the charity has general information such as whether or not it has registered with the IRS. All that tells you is that the charity wrote a letter to the IRS stating that it has a valid charitable purpose and the IRS accepted it. However, they also list organizations where the IRS has withdrawn registration.
The charity’s page provides more detailed data on several tabs such as one labeled “Form 990s and docs”. The Form 990 is required to be submitted to the IRS annually and contains substantial information about the organization. Yes, you may not care about most of the detailed financial data, but you can look at the top level data such as revenue, expenses and net income. It contains names of Board of Directors and the executive director and his or her salary. There are several pages of questions that provide more information. I always check line 12a of Part III to see if the financials were audited by an independent accounting firm.
GuideStar obtains the Form 990 directly from the IRS, so the charity cannot alter the data contained on it. The charities can also add some information to their Guidestar report, such as its mission statements and programs that they conduct.
We recommend that you always check GuideStar.org before donating to a charity, and especially if you plan to make a large donation.
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