For many families, the end of the year is a natural time of giving. The holiday season puts us in a generous frame of mind, and with the tax year coming to a close it’s easier to get a clear picture of how a donation fits into household finances.
Here we present a short guide to help you research an organization you’re planning to support. Throughout this post we’ll use ourselves, the San Bruno Education Foundation, to illustrate the different ways you can do this research.
A good place to begin your research is the organization’s website.
It’s important to set expectations appropriately. If you’re considering a small, local charity, it may not have the time, money, and expertise to maintain a website. If the org does have a site, you can probably get a good idea of the projects your contribution will support.
The organization will likely list the different ways to donate. Pay particular attention to this if you’re responding to a solicitation. Unfortunately, charitable giving presents a unique opportunity for fraud. With a normal purchase, if your payment winds up in the wrong hands you’re very likely to notice since you will not receive the product or service in exchange. Donations that don’t find their intended target, on the other hand, can fly under the radar.
Fraudsters have been known to reach out via email, phone, direct mail, and even door-to-door, claiming to represent a charity. The general guideline to follow is: If a charity establishes contact with you, make sure that you are in control of the way the organization receives your gift. Choosing an option from the org’s website is a good way to go.
Verify nonprofit status
Many charitable organizations in the United States are established as “501c3” nonprofits. You may have heard this term, but what does it really mean?
This means that the org is granted “tax-exempt” status by the federal government under Section 501(c)(3) of the Internal Revenue Code. That is, the US government does not require the org to pay taxes on its income. It also means that qualifying gifts are tax-deductible for donors, which effectively increases the amount you can give.
To use a concrete example, consider a family with a household income that falls into the 25% federal tax bracket and the 8% state tax bracket. In order to spend $100 on a normal purchase, that family has to earn nearly $150 in order to have $100 after paying state and federal taxes. When given as a charitable gift, however, the family can give $150 with the same impact to the household budget as that $100 purchase.
To check a nonprofit’s status at the federal level, use the IRS Exempt Organizations Select Check Tool. This tool allows you to search by the name, location, or Tax ID Number (also called Employer Identification Number, or EIN).
If you search for our EIN, 20-1051818, the EO Select Check Tool will return our record in the IRS database:
Note that this tells you the state in which the organization is based, allowing you to follow up with further verification at the state level.
For a California nonprofit, check the published list of tax-exempt organizations published by the State of California Franchise Tax Board. Specifically, look at the Exempt Organizations List and search the appropriate section of the list for the name of the organization.
This list is broken down into sections, but even so, each section is a quite long. You can still quickly locate an entry by using the text search function of your web browser. Once you’re viewing the list of organizations, press ctrl-F (for “Find…”) to activate this function and simply type in the org’s name to search for it.
If you view the appropriate section and search for “San Bruno Education Foundation”, you’ll locate our entry:
Charity evaluators can be great tools for researching a charitable organization. The two most popular such tools are Charity Navigator and GuideStar. Charity evaluators exist to validate the status of nonprofits and provide transparency into their operations.
To be rated on Charity Navigator, a charitable organization must meet certain requirements. A small org that doesn’t meet those requirements will only have basic information listed, as is the case for our Charity Navigator listing. For this reason, Charity Navigator is a great resource for investigating mid- to large-sized orgs that meet its rating requirements.
A great way to learn about a nonprofit is to engage with it on social media. This not only gives another window into the organization, but it also allows you to interact with other supporters, which can be an excellent source of the most current information.
In particular, this can be a good way to learn about small, local orgs that don’t have the resources to keep a destination website. Setting up a social media page doesn’t require the org to purchase a domain or host a site, so even the smallest nonprofits are likely to have the capacity to do this.
Your task is not complete until you include a simple web search. This can turn up many other significant sources of information not included above.
If you Google “San Bruno Education Foundation”, for instance, you’ll see an info box with a map of the area we serve as well as search results including our LinkedIn profile , our San Bruno Chamber of Commerce listing, our Wikipedia entry, and more.
Sometimes the best way to get information about a specific question is to reach out and make contact with someone at the nonprofit you’d like to support. You can usually find a way to get in touch on the org’s website.
For organizations with a local presence, especially if you’re thinking about making a sizable gift or you’d like to volunteer or fundraise, consider a direct meeting with a representative. Even global nonprofits often have a local office, and making contact with local orgs can open other doors to getting involved in your local community.
When people reach out to us, we’re always happy to get in touch. Often, we invite anyone interested in our work to observe the open portion of our next board meeting.
Hopefully, you’ve found this guide helpful to your end-of-year giving plans. Happy holidays!