RESEARCHING A CHARITY

December 1, 2023

Before finalizing your charitable giving plan to a philanthropic organization to verify that your contribution will be spent to achieve your goals, research the organization to learn more about its total assets, yearly donations received, management expenses--including salaries, and amounts ultimately spent yearly achieving its mission.

U.S. tax laws require that nonprofit organizations’ tax documents be available to anyone upon request directly from the IRS or an independent online source.

Two sources for researching nonprofits online are ProPublic.org and Candid.org. Their free websites link to over 1.8 million U.S. nonprofit organizations' federal tax forms and give information detailing each organization’s money source, how the donations are spent, and why you should care. The information available may help you predict whether your charitable contribution is more likely to improve the life of an employee, an investment, or your philanthropic goal.

ProPublica’s mission is to make information available to allow people to evaluate the public trust of philantropies, governments, businesses, and other institutions.

Candid was formed in 2019 when GuideStar and The Foundation Center merged to form a single organization that advises and provides the most comprehensive data on nonprofit organizations. Candid.org details all nonprofits’ listed programs, financial details, operating costs, and more so that you can identify the nonprofits that align with your goals.

Many well-known and respected charitable organizations’ full stories are well-detailed in their IRS filings. Before you leave money to a specific charity, you may want to know the total of their assets, the amount of money they receive each year, the percentage of money spent to collect more money, the amount of money their highest-paid board members or employees receive, and more. There’s nothing wrong with the amounts, but you have a right to know.

One of our estate planning clients decided that a local chapter of an organization that houses families of children in hospitals wasn’t the best fit for his donation when he learned through GuideStar that the nonprofit has more than $125 million in assets and almost half of their $14 million in yearly donations goes to employee salaries and benefits, including more than $600,000 a year to a single employee. Instead, he selected a charity whose spending better matched his goals.

Another person claimed that reviewing the tax filings of an organization that raises money from the donation of cars taught her that the organization’s $90 million in yearly contributions was used too narrowly for her goals to fund only organizations of a specific religion, which is not disclosed in their catchy advertisements. Instead, she located a charity with less funding that tended to spend its money on kids in her local community.

Research nonprofits via either Candid.org or ProPublica.org.

Call us if you'd like to learn more about researching nonprofit organizations.