This post was written by Lynn Weinstein, Business Reference and Research Specialist in the Science & Business Reading Room.
As the holidays approach, requests for charitable donations start coming in from many organizations. But how can you be sure a charity is legitimate and well-rated before you donate?
One helpful tool to start when researching charities is The Nonprofit Sector in the United States: A Resource Guide, one of the many library guides that we offer in the Business Section at the Library of Congress’ Science & Business Reading Room.
This guide includes resources for researching nonprofits and covers a range of topics—from associations and datasets to consumer information. It lists resources that detail how to start a nonprofit, and those that discuss finding grants and give fundraising tips. One critical feature is a section on IRS Form 990, an annual filing requirement for all tax-exempt organizations. Form 990s are essential for assessing a charity because they offer a detailed snapshot of the entity’s financials, including revenue, expenditure, and income data. Note, religious organizations are automatically tax exempt and do not need to file a Form 990, so it can be challenging to find additional information on this subsection of organizations.
To confirm a nonprofit’s eligibility to receive tax-deductible contributions, start with the IRS database on Tax-Exempt Organizations. This database allows you to check a nonprofit’s status and filings. For accurate search results, use the official name of the organization and enclose phrases in quotation marks (“”).
State governments can also provide information on tax–exempt status. The IRS offers a list of links to state information on tax-exempt organizations. Information can vary by state, but often includes regulations, filing forms, and directories of registered charity organization in the state. The National Association of State Charity Officials maintains a register of charity organizations for state attorney generals and exchanges that information with the IRS and state officials. Individuals can locate state and federal resources to verify the legitimacy of a charitable organization on their website.
For further insights, ratings and reviews of nonprofits, visit the guide’s Consumer Information page. Under the Online Resources tab, you’ll find links to Charity Navigator, GuideStar (Candid), and the Better Business Bureau. These databases provide ratings, financials, and reviews to help you make informed giving decisions.
Finally, be aware of common “red flags” when considering charitable donations: avoid cash-only donation requests; beware of urgent pressure to donate immediately; and always check an organization’s legitimacy if it’s unfamiliar to you. If you are concerned that you have been a victim of a charity scam, you can contact the Federal Trade Commission (FTC).
With a focus on trusted resources and a few precautions, you can feel assured that your holiday contributions are supporting impactful causes.
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