Be Generous & Be Savvy

Not long ago the Attorney General of the State of Washington’s website featured a headline about an unscrupulous charity that claimed to raise money to help Veterans but actually didn’t. It was a scam. At the Holidays, many people’s thoughts turn to their charitable giving for the year. This is also true of people trying to scam people out of their funds by pretending to help people when they are really only helping themselves. Being savvy means knowing how to do a little due diligence on charitable groups especially if you do not know them first hand.

All nonprofit organizations and charities – with the exception of churches and other houses of worship – must file an annual informational return called a Form 990. Grantmakers like Blue Mountain Community Foundation conduct extensive background research when considering a grant starting with the Form 990. There are other sources available too to examine a charity’s operations and finances. This information is just as helpful to individuals who donate as to grantmakers.

Here are a few tips and resources:

  • Remember that “charitable”, “nonprofit organization” and “tax exempt” mean different things. Charitable organizations are nonprofits and tax exempt but not all tax exempt and nonprofit organizations are charitable.

  • When considering making a gift, double check that the organization is a Section 501 c 3 charitable organization under the Internal Revenue Code. There are many types of nonprofit organizations under Section 501 c – but only gifts to 501 c 3 organizations qualify for a charitable tax deduction to the donor.

  • Ask for a copy of their letter of tax exemption from the IRS or their EIN number (an identification number issued by IRS – its “Employer Identification Number”). Information searches are easier if you have an EIN for the charity in question. For example, BMCF’s EIN is 91-1250104.

  • Examine Form 990s: guidestar.org should be an early source for information about a particular charity or nonprofit organization. That is because all of the annual disclosure forms, called Form 990 (or Form 990- PF if the charity is a private foundation) filed by charities throughout the U.S. are available on that website. All nonprofits have to file with the exception of churches or houses of worship. Smaller organizations file Form 990 EZ. Very small charities with revenues less than $50,000 file a special postcard with the IRS to show they are still active.

Charities report mission, operations, revenue, expenses, assets, etc. and certify that they are following the law in each year’s Form 990. You’ll find most of the relevant financial information on the first page. It’s important to note that if an organization fails to file a Form 990 three years in a row the charity automatically loses its tax exempt status. This is important if one wishes to claim a charitable deduction: Donations to groups that aren’t 501 c 3 cannot be claimed as charitable deductions.

  • IRS List of Charitable and Nonprofit Organizations: In addition to Guidestar.org, another resource is the IRS’s own list of all tax exempt organizations in the U.S. available on its website www.irs.gov. It’s a three step search and pretty straight-forward: Go to “Charities & Nonprofits” button, and then “Search for Charities”, then click on “Tax Exempt Search.” If the charity is currently in good standing your search should find it on this alphabetical list.

  • State of Washington Regulation: Charities are regulated by both the Attorney General and the Secretary of State. See access.wa.gov and search for “Charities.” Go to the Secretary of State website unless you wish to register a complaint – then visit the Attorney General’s website. Charities have two registrations to keep current each year. The first is to keep their corporate status active, and the second is to maintain their ability to raise funds in the state of Washington. Both filings are with the Secretary of State. Out-of-state charities must be registered in every state they are actively fund-raising; Washington charities have to register in other states where they actively fund-raise in addition to their home state. If you receive an appeal from a group outside of Washington, ask them for their registration with the State of Washington. For example, BMCF is registered to raise funds in both Washington and Oregon.