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       Using "Watchdog" Groups To Evaluate Charities
Once you're satisfied that a charity is legitimate, you should still consider the purpose of the charity and how well it uses its funds.  Call the resources below to find out if the charity has been evaluated and meets your own personal standards. 

Keep in mind that requirements for a "good" charity vary from group to group.  If a charity is found listed with one group but missing from another, it may be for reasons that aren't that important to you.  For example, PAS may require its member organizations to use 60% or more of their funds for non-administrative costs, while The Better Business Bureau may require a greater expenditure of 70%.  If you're happy with a charity that uses 60% for such purposes, then it shouldn't matter to you that this organization failed to meet the higher standards of the Better Business Bureau.

Sometimes you'll find that for one reason or another, the charity your asking about couldn't be evaluated.  Make sure the evaluating agency tells you why this is so.  It may be that an evaluation form was never sent to the charity.  Often, the charities that get selected for evaluation are the ones most asked about.  Thus, through no fault of their own, new or obscure charities may remain unevaluated.

In other cases a charity will not be evaluated because it failed to respond to the evaluating agency's questionnaires.  Why they didn't respond may be important.  Ask the agency if this is the first time the charity has been given a questionnaire or if they were contacted many times before.  Perhaps the organization was on the list a year ago but couldn't get their paperwork done in time to be list this year.

Be on the lookout for charities that don't respond to surveys year after year.  You'd expect that a charity would want to be evaluated.  A positive evaluation makes the charity more respectable and enhances its ability to raise funds.  If for some reason the organization refuses to be evaluated, call the charity and have them explain why.  If they want your money, they'll have to tell you.  Note: In most cases, charities are evaluated free of charge.  Be wary of any organization that tells you it costs too much to be evaluated.  It could be they're making excuses and fear that an evaluation would only hurt them.

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            Evaluating A Charity Yourself 

The Importance Of Being Tax Exempt Under 501(c)(3).

If the charity remains unevaluated or you want to do your own evaluating, ask the IRS if the organization filed for a tax exemption under IRS 501(c)(3).  Even when charities don't have to file for this exemption, they often will do so anyway.

Be on guard against charities that refuse to file under 501(c)(3).^[1] Legitimate charities go to great lengths to encourage people to make donations. And it is almost always to their advantage to take this step.  The perks of filing as a 501(c)(3) include receiving special postal rates, being exempt from state sales taxes and the guarantee that all charitable donations will be tax deductible.

A guaranteed tax break encourages people and corporate sponsors to give larger donations. Other types of organizations (including churches which need not file under 501(c)(3)) cannot make this guarantee.  Indeed, giving to other types of charities is more risky because the IRS can always decide later that the organization is "non-exempt".  And if that happens, then the donor must pay taxes on all non-exempt donations.

501(c)(3) organizations are also more accountable and therefore inspire public trust. To qualify as such requires that the charity opens its records to public inspection. Indeed, these organizations must furnish the IRS with documents indicating the purpose of the charity, the charity's expenditures, copies of its annual reports, and a list of the charity's board members, officers and their salaries.  

Legitimate charities want you to know exactly what they’re doing with your money.  They know that a trusting public is bound to give more. So if a charity is not a 501(c)(3), have them explain why. Their failure to file could mean they're hiding something.

The Form 990 And The Application For Recognition Of Exemption
Most 501(C)(3 charities with gross incomes of over $25,000 are also required to file an IRS Form 990.^[2]  The form 990 provides comprehensive information on a charity's finances and governance and must be filed annually. It will show you the organization's program activities, revenue and expenses, and how they've raised and spent money over the last five years.  

If you want to confirm what the charity's purpose is or see a copy of their mission statement, request their "application for recognition for exemption." Under The Freedom Of Information Act, the IRS must honor your request. Usually this information will be on "Form 1023" for 501(c)(3) organizations or "Form 1024" for other tax exempt organizations.

 Those who shy away from the IRS can get the charity itself to forward these records, as well as copies of its annual report, articles of incorporation, bylaws and financial statements, including any documents filed with the IRS.

  If you feel uncomfortable asking for these documents, you can preface such requests with "I WANT TO GIVE TO YOUR ORGANIZATION BUT I ALSO WANT TO MAKE SURE I'M GIVING RESPONSIBLY. I'M SURE YOUR CHARITY IS FULL OF REPUTABLE PEOPLE, BUT I STILL NEED (XX, YY, and ZZ) SO I CAN MAKE AN INFORMED DECISION BEFORE GIVING.  I'M SURE YOU UNDERSTAND." If the charity wants your money, they'll honor your requests.

Lastly, search the Internet for comments and criticism about the organization's programs and activities.  These sources may shed light on whether the charity is actually carrying out the programs as promised.

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Helpful Resources

The Philanthropic Advisory Service (PAS) of The Council Of Better Business Bureaus (703) 276-0100
PAS rates charities on whether they meet acceptable standards for giving.  Note: While charities get evaluated for free, not all charities are selected for evaluation.  A charity will only receive an evaluation survey if a large number of people have asked about the organization.  

Obscure or start up charities may never receive a survey even if they ask for one. To obtain a free copy of their "Give But Give Wisely" newsletter listing whether a charity complied with their standards, call (800) 575-4483 or send a self addressed, stamped business-size envelope to Holiday Giving,  Council of The Better Business Bureau, 4200 Wilson Blvd.,   Suite 800, Arlington, VA 22203.

Charity Navigator
Evaluates the financial health of over 3500 charities so you can make wise giving decisions. Find out how much a charity spends on programs vs. administrative costs, what the spend on fundraising and whether they are growing or shrinking.

The Better Business Bureau

National Help Orgs For A Variety Of Consumer Problems
The Elderly, Environment, Families, Fraud, Health & Safety, Insurance The Handicapped, Medical Problems, Telemarketing and more.

The American Institute of Philanthropy 301) 913-5200    
Evaluates about 350 charities and offers guidance on selecting one.  Charities are evaluated for free and do not  need to pay a fee to be listed. Keep in mind that some charities won't be listed.  Charities are selected for   evaluation based on the number of people who ask about them.  The fact that a charity volunteers for evaluation does not guarantee the organization will be evaluated.  

Charitable Choices  
This site gives brief overviews of more than 300 charities, including the American Red Cross and the Environmental Defense Fund, and often includes links to the charities' individual web sites.  It has some good tips for choosing a charity and such useful information as how much of your donation will be spent on administration and fund raising.  Browse  organizations by the field in which they work, such as children, civil and human rights of the homeless.  

The Evangelical Council For Financial Accountability  (800) 323-9473 
Evaluates over 900 Christian organizations and will tell you if a specific charity is a member.  Some charities may choose not to participate because of their $200 application fee.  Members must also pay annual dues which vary according to the cash income of the organization.

Guidestar (800) 421-8656  
Search Guidestar's free online data base for information on  over 1,000,000 non-profits. Guidestar makes it easy to find the right charity to give to, and you can find charities by name, subject location, etc... The Guidestar website can help you find information on charities with results ranging from simple name and address listings, to reports with extensive financial information to reports with additional input from charities on their mission, accomplishments and objectives. 

The Combined Federal Campaign\Office of Personnel Management                         (202) 606-2564
All  Members must have administrative and fund raising expenses below 25% of their total costs or have viable plans to get expenses below 25%.  All members of the Campaign are required to be 501(c)(3) corporations and shall certify that they are directed by active and responsible governing bodies whose members have no material conflicts of interest.  

The CFC also requires that a majority of these members serve without compensation.  To join the CFC costs nothing.  Membership is free for any non-profit that qualifies.  Benefit to givers: Members of the CFC must be extremely accountable with their funds.  Thus donors know their money will go to a good cause and be spent responsibly. Benefit to Member Charities: CFC charities can solicit funds from federal employees at their work place so long as they follow CFC guidelines.  If the employee makes a donation, such can be taken directly from the employee's  payroll.  This enables millions of federal workers to give money in convenient, small weekly amounts and keep track of such for tax write-off purposes.  To make a donation, federal employees need merely list the member organization and weekly    amount they wish to give.  From there, the money will be automatically deducted from their paychecks.  

America's Charities (800) 458-9505  
Evaluates member charities. This group is a coalition of 92  member charities that pay annual dues based on how much they raise each year.^[ii]  Members must have less than 25% of their expenditures go to administrative costs and are required to  register with the IRS as a 501 (C)(3) organization. 

Internal Revenue Service (877) 829-5500
Speak to their "exempt organization division" to receive  information on charities that filed under code section 501(C)(3). 

Check out their web site for a listing of tax exempt organizations (click on tax information for business and then click on "exempt organizations").  Publication 557 helps describe the difference between 501(c(3), (501(c)(4)(civic leagues such as the fraternal order of police or volunteer fire department) and 501(c)(19)(veterans organizations).  
   
Federal Trade Commission  
Regulates misleading or fraudulent business activities ranging from false advertising to fraud on the Internet. They also have informational brochures on giving to charities and how to know if a charity is legitimate.

Note: The Federal Trade Commission cannot intervene in individual disputes, but the information you provide may indicate a pattern of possible law violations requiring action by the FTC. To file a complaint, write: The Correspondence Branch, The Federal Trade Commission, Washington DC 20580

US Postal Inspection Service
To report any outfits that misrepresent themselves to you  through the mail. i.e. fraudulent promises or dubious offers, advertisements or requests from telemarketers or charities where you either receive literature from them or they ask you to send things via U.S. mail.  

Consumer Information Center (800) 664-4435.  
They have local and toll free numbers for both government and non-profit agencies.  This agency can help you find the charity registration office located in your state.  

National Fraud Information Center (800) 876-7060
Logs complaints about telephone and Internet fraud and relays them to the appropriate state and federal law enforcement agencies.  

The Christian Stewardship Association

The Yellow Pages 
To find charities look under "Social Service Organizations."  

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Foundations

People set up foundations to gain more control over how their money is spent.  When you give to a charity, it is the charity that calls the shots.

If you want a say in how your money is spent, consider establishing a foundation or joining a community of foundations. For Help see the resources below.

Foundation Center (800) 424-9836  
The Foundation Center can direct you free of charge, to the  organizations most likely to give grants to your cause.  Their directories will help you locate grant makers by subject, geographic area and a variety of other factors.  While they will answer quick reference question over the phone, they will not do your research for you.  You must create your list of potential donors based on what you find in their library.  The Foundation Center also has information on how to set up and manage foundations and other types of non-profit organizations. Non-profits receive a free library orientation session each Tuesday 9-10:30 a.m. Call ahead for an appointment.  

The Council On Foundations (202) 466-6512
Provides contact numbers for local foundations.

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Securities