How Can You Tell If A Nonprofit Is Really What It Claims To Be?

According to the National Center for Charitable Statistics, there are currently over 1.6 million nonprofits that have been registered with the Internal Revenue Service (IRS). The number of nonprofit organizations that exist today has increased by over 24 percent in the past 10 years alone.

This profound number should come as no surprise, as you probably hear about these organizations on the news, on your Facebook feed, or even through letters that get sent directly to your home.

If you find purpose in donating your money to a charity, it may prove disheartening that you can’t quite distribute your funds to every cause that is near and dear to your heart. But even if you feel that you have found the organization you would love to support, it is important to first do your homework.

The sad truth is that there are so many nonprofits that are simply out to get rich quick, with little impact being done to a group of people in need. Just like monetary contributions are a way to positively affect society, so is ensuring that certain organizations are actually following through with their mission statements.

Take A Look Behind The Scenes Of The Organization

Demand that the organization provide you with their Form 990. These can get a bit lengthy, especially if the organization is on the larger scale, but there are a red flags that you can find once you know what to look for:

Their revenue vs. their expenses.

How much does the organization pay their CEO and other employees? How much of the money they take in do they spend on fundraising? If any of these amounts take up a significant portion of their expenses, it means that a lower percentage of their profits are actually going towards influencing those in need.

Any conflicts of interest.

Somewhere in the form should be a detailed list of all the individuals who are closely involved with the organization, including both its board members and top executives. If the names listed are all related to each other in some way, it could be a red flag that certain secrets are being kept hidden.

A list of their accomplishments.

Check for any descriptions of what the organization has been up to lately. If there isn’t much listed, or the details are ambiguous, it could mean that the organization has done nothing of substance with the money it has raised.

Never be afraid to ask for this information. If you are donating money to a nonprofit, so are hundreds or thousands of other individuals. What you discover by taking a look at their Form 990 or asking representatives from the organization certain questions could be instrumental in seeing if the foundation is truly what it claims to be.

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