We've all been in this situation. We get a charity solicitation in the mail or by phone. Usually it's annoying, but we sometimes think, "This is a genuinely worthy cause. Maybe I should support it."
We get ready to write the check, but we may hesitate as we think, "But how do I know that this organization is legitimate? Will they really spend my contribution on the cause or on some executive's mansion?" It's a dilemma because we don't want to be miserly and suspicious, yet the world is still full of crooks.
Don't give up because help is at hand: Several databases have descriptive and evaluative information on the nation's charities and nonprofits. These databases provide information on the missions, programs, finances, and performance of these organizations. The databases may vary widely in their breadth and depth of content, but all are valuable in bringing transparency to the enormous U.S. charity sector.
Charity giving is big. In 2005, Americans gave more than $260 billion to charitable causes ("Americans" includes individuals, corporations, and foundations, with individuals giving by far the largest portion). With such stakes, transparency and accountability in the nonprofit sector are essential. Not only must this money be properly spent, donors must have confidence if they are to keep giving. So, whatever amount you give, check the charity watchdogs to see that it's well used.
There are 1.5 million registered U.S. nonprofit organizations. There are many types, from section 501(c)(3) public charities to private foundations to a variety of religious groups. Their common denominator of information is the Form 990, an operational and financial report that most nonprofits are required to submit to the Internal Revenue Service (IRS). Form 990s are public, and their content is the primary source for the charity databases, from which they produce reports, analyses, and evaluations. In addition to the 990s, the databases also use information provided by the charities themselves, including program descriptions and annual reports. Given the amount of information that these databases provide, we have a solid base for highly informed giving.
Charity Navigator (www.charitynavigator.org) is the most useful site for the analysis and evaluation of the nation's largest charities. It is a 501(c)(3) nonprofit charity itself, founded in 2001, covering 5,200 large U.S. charities (those that receive at least $500,000 in annual support). This is a small fraction of the entire nonprofit sector, but it does include the prominent and wealthy organizations that conduct much of the nation's charitable spending.
For each charity, Charity Navigator provides mission, leadership, and financiáis, and the most extensive rating system of any charity watchdog. Analyzing the 990 forms and other data, Charity Navigator produces several numerical ratings of how responsibly and efficiently the charity uses its donations. Charity Navigator also assigns a zero- to four-star overall rating to help evaluate and compare charities quickly. The site also has reports, studies, and useful guidelines for informed and effective giving.
Charity Navigator is free, with most content available without registration. There is a free registration level, which offers additional information and features, including historical data and charity-comparison tools.
Charity Navigator, 1200 MacArthur Blvd., Second Floor, Mahwah, NJ 07430; (201) 818-1288.
GuideStar (www.guidestar.org) is by far the largest charity database, covering all tax-exempt nonprofits registered with the 1RS, including 900,000 charities, 118,000 foundations, and 500,000 other organizations. GuideStar is also a 501(c)(3) nonprofit that was founded in 1994 as a resource for the entire nonprofit sector, including large donors, foundations, government agencies, and others that require detailed information on charities. …