Our Thoughts

Vetting a Charity

Do you scrutinize your charities the way you scrutinize your investment portfolio? If you don’t, you should! A recent article by Laura Saunders in the Wall Street Journal entitled “How to Vet a Charity” provides guidance.

The good news for careful givers is that in return for their tax-free status, nonprofit groups other than churches must make extensive public disclosures about their finances and governance. Churches don’t have to disclose information because of First Amendment protections. But, exempt groups other than churches must make broad financial disclosures to the Internal Revenue Service annually on Form 990. These forms are available in online data bases at websites such as GuideStar (www.guidestar.org) and The National Center for Charitable Statistics (www.nccs.urban.org).

Rating sites include Charity Navigator (www.charitynavigator.org), CharityWatch (www.charitywatch.org), and GiveWell (www.givewell.org). Charity Navigator, for example, applies its own formulas to information gleaned from a charity’s Form 990 to determine star ratings for 8,000 charities. The group also publishes donor advisories on nonprofits with serious charges filed against them or questionable financial reporting. Access is free.

Subscribers to the Wall Street Journal may Read More Here.