How to Tell Which Charities and Non-Profit Organizations Are Legitimate and Trustworthy

People often hesitate before making a monetary donation to a charitable cause or non-profit organization for fear of being scammed or that their money will be used up in administrative costs, rather than the actual cause for which they’re donating. While there will always be administrative costs to consider, there are several charities whose administrative costs are very low, allowing the majority of your charitable donation to be used for the direct benefit of the causes you have chosen.

Deciding Who to Trust

One of the biggest reasons people hesitate to donate money to charities is fear of being scammed. Is the money going to be used for the advertised purpose? Some key ways to ensure your charity is legitimate include:

• Check to see if the charity is a member of the Better Business Bureau (BBB) and if the organization meets the BBB’s Standards for Charity Accountability through the BBB Wise Giving Alliance.
• Is the charity a Section 501(c)(3) tax-exempt organization?
• Is the charity a long-standing organization that has been around for years? Keep in mind that well-known charities can be corrupted, just as new charities can be totally legitimate. You just have to do your homework. The fact that most charities and their reputations can be found online now truly makes that homework a cinch.
• What is the web address of the charity? Does it end in .org? This is usually a more trustworthy site than the .com sites. There are exceptions to every rule, however.
• Always read the ‘About Us’ or ‘Our Mission’ areas of these websites. They will give you a good indication of what you can expect.
• If a charity is legitimate, it tends to be very open about its fiscal information and will declare how much of each dollar you donate is spent on administrative costs and how much is spent on the actual cause. Most legitimate charities will also list that they are a member of the BBB and/or certified by the Charity Navigator, which is an awesome organization that lists ratings and reviews of charities online. Again, there are always exceptions. It isn’t a requirement for charities to be BBB-Accredited, for example, and all may not be listed on Charity Navigator.

BBB Wise Giving Alliance

The Better Business Bureau’s Wise Giving Alliance is a strict accountability program that lists twenty areas in which charities and organizations must excel in order to meet their accountability standards. These areas include:

• Board Oversight
• Board Size
• Board Meetings
• Board Compensation
• Conflict of Interest
• Effectiveness Policy
• Effectiveness Report
• Program Expenses
• Fund-Raising Expenses
• Accumulating Funds
• Audit Report
• Detailed Expense Breakdown
• Accurate Expense Reporting
• Budget Plan
• Truthful Materials
• Annual Report
• Website Disclosures
• Donor Privacy
• Cause marketing Disclosures
• Complaints

The BBB provides a list of hundreds of charities from which donors may choose to review their stats. Each charity’s link will provide accreditation information, website and physical location, and a full report regarding the aforementioned standards.

Remember: there are exceptions to nearly every rule. If you do not see a particular charity or organization listed on the BBB and Charity Navigator websites, this does not necessarily mean it is a scam. It could simply mean that it is a very new organization or charity. Keeping this in mind, I would personally refrain from making monetary donations to any organization that does not fully disclose the information provided by the more well-known charities, such as fiscal information, administrative costs, etc., unless it is a cause created by someone you know to be trustworthy.

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