How to Make Sure Your Charitable Donation Goes to a Worthy Cause

Don’t succumb. Even if the person claims to be with an organization you know or have donated to in the past, they could be a scammer pretending to represent that charity. Tell them you want to look into the organization further before giving, says Bennett Weiner, president and CEO of the BBB Wise Giving Alliance, a charity monitoring organization.  

If someone approaches you while you’re out or is soliciting door-to-door, ask for brochures on the organization or other material that you can take with you instead of donating on the spot. “Legitimate charities will welcome that,” Weiner says.

Verify the charity is real

Sometimes scammers create fake charities with names that sound similar to those of legitimate groups, says Michael Thatcher, president and CEO of charity ratings organization Charity Navigator. They may use artificial intelligence to craft emails, brochures and even videos that look professional and convincing.

One warning sign to watch for: A claim that 100 percent of donated funds go toward the charity’s programming or the cause it’s supporting. “All organizations have administrative costs,” Weiner says.

If you are uncertain about a charity, look it up using the IRS’ tax-exempt organization search tool. Almost all public charities and foundations must be registered with the IRS as tax-exempt organizations to receive tax-deductible contributions.

Additionally, most states require organizations to register with them before they can solicit donations from residents. The National Association of State Charity Officials has a list of state offices you can contact to see if a charity is registered in your state.

Reject unusual payment methods

A telltale sign of a charity scam is a request to make a donation via a gift card, wire transfer or cryptocurrency.

The safest way to make a donation is with a credit card or check, according to the Federal Trade Commission — that way, there’s a record of what you gave. Steer clear of organizations that won’t accept these forms of payment.

Select charities that align with your values

Be proactive about your giving. Or, as Styron puts it: “Choose the charity, don’t let the charity choose you.”

She recommends creating a “giving plan.” Start by identifying the causes you care most about, and identify a few organizations — she recommends three to five — that focus on those issues. That gives your giving more impact. 

“Donating to too many charities is also a great way to end up on dozens and dozens of telemarketing, email or direct mail lists, since many charities lack privacy policies that prohibit them from sharing your data,” Styron says. 

Once you’ve made your list, do some homework. Check those charities’ websites to get information about their mission, impact, finances and leadership.

But don’t base your decision solely on what the organization says about itself. Look to third-party sources for unbiased information about charities you are considering. 

You can use the IRS tax-exempt organization search tool to access a charity’s Form 990, which shows where every penny goes. A charity with a $5 million annual budget might be spending an outsize share on marketing and executive salaries. In addition, investigative journalism organization ProPublica has a database of charity tax filings and flags forms that indicate conflicts of interest and other issues of concern.

Nonprofit charity-monitoring organizations can also be helpful resources:  

• CharityWatch grades charities on an efficiency rating scale of A+ to F based on deep research into their finances. The site’s top-rated charities allocate 75 percent or more of their budgets to programming.
• Charity Navigator evaluates charities on four criteria — impact, finances, leadership, and culture and community — to issue a zero- to four-star rating. Thatcher says charities with four-star ratings typically allocate 70 percent or more of their operating budgets to programming.
• BBB Wise Giving Alliance, affiliated with the Better Business Bureau, doesn’t rate charities, but it does measure them against 20 standards of accountability, such as fundraising expenses, board compensation and donor privacy. An organization must spend at least 65 percent of its budget on programming to meet the alliance’s standard for appropriate program expenses.