First determine if the organization is a nonprofit, meaning it's been granted tax-exempt 501(c)(3) status from the IRS (churches and nonprofits with less than $5,000 in revenue, however, don't have to register). But this shouldn't be the end of your research. "Just because a group is a bona fide charity doesn't mean it's going to use your donation wisely," says Sandra Miniutti, CFO for Charity Navigator, an organization that evaluates nonprofits.
Websites like
CharityNavigator.org,
Give.org (the Better Business Bureau's Wise Giving Alliance) and
GuideStar.org compile data in a donor-friendly way to make it easier to vet some of the more than 1.4 million registered tax-exempt organizations that want your donation. On these websites, you'll find information on charities' spending habits (how much is going to administrative expenses?) and transparency (are they open about what they're doing with the money that actually goes to the cause?). And remember 35%— That's about how much nonprofits should spend on admin and fundraising costs. The rest should go to charitable initiatives.
