About 31 percent of all charitable giving in the United States happens in December. That single month compresses an enormous amount of generosity — and an enormous amount of risk — into a few weeks. Donors are emotionally primed, tax deadlines are visible on the calendar, and solicitation campaigns are at peak intensity. Fraudulent operations know this. So do poorly managed legitimate charities that spend more on overhead than on the causes they claim to serve.

The standard advice — “check Charity Navigator” or “make sure they’re a 501(c)(3)” — is not wrong, but it stops well short of what a careful donor actually needs to know. A charity can hold valid tax-exempt status, maintain a passable rating on a watchdog site, and still direct most of its resources toward executive salaries, fundraising fees paid to third-party telemarketers, or programs that produce no measurable good. Conversely, a small local nonprofit may lack the scale to earn a top rating but deliver extraordinary results per dollar spent.

What follows is a practical, layered process for verifying a charity before a year-end donation — one that goes beyond the surface-level checks most donors perform.

Start With the IRS: The Foundation of Nonprofit Check Work

The first question is simple: does this organization actually have tax-exempt status? This matters both for your deduction and as a basic legitimacy signal. The IRS maintains a publicly searchable database called Tax Exempt Organization Search, available at irs.gov. You can search by name, EIN (Employer Identification Number), or location.

Two things to confirm in that database:

• Active status: The organization should show as currently eligible to receive tax-deductible contributions. Some groups lose their status for failing to file annual returns (Form 990) for three consecutive years — this is called automatic revocation, and it affects roughly 30,000 organizations per year.
• Classification: Look for 501(c)(3) public charity status specifically. Donations to 501(c)(4) social welfare organizations or 501(c)(6) trade associations are generally not tax-deductible, even though those groups may solicit donations using charitable-sounding language.

Watch for Name Confusion

One of the more effective fraud tactics involves creating an organization whose name closely mimics a well-known legitimate charity. “American Cancer Research Foundation” versus “American Cancer Society.” “Wounded Warrior Assistance Fund” versus “Wounded Warrior Project.” The IRS search will help you confirm whether the specific entity soliciting you matches the name you think you’re giving to. Always search by EIN when one is provided — names can be copied, EINs cannot.

Reading the Form 990: The Most Underused Tool in Donation Safety

Every public charity with gross receipts above $50,000 must file a Form 990 with the IRS annually, and those documents are public records. Most donors have never looked at one. That is a significant gap, because the 990 contains more useful information about a nonprofit’s actual operations than any summary rating ever will.

You can access 990s through Candid (formerly GuideStar), which hosts a searchable database. A free account gives access to recent filings.

What to Look for on the 990

• Part I — Summary: Gives you total revenue, total expenses, and net assets. Look at the trend over three years. Revenue declining while net assets shrink is a warning sign. Revenue growing while program expenses stay flat is another.
• Part VII — Compensation: Lists the five highest-paid employees and officers. An executive director earning $800,000 at a charity with $2 million in total revenue deserves scrutiny. Context matters — a major hospital network operates differently from a local food bank — but disproportionate compensation is worth noting.
• Part IX — Statement of Functional Expenses: This is the critical section for donation safety. It breaks expenses into three categories: program services (the actual work), management and general (administration), and fundraising. Healthy charities typically direct 75 percent or more of total expenses toward program services. If fundraising costs exceed 35 percent of total expenses, that is a red flag by most watchdog standards.
• Schedule L — Transactions with Interested Persons: Discloses loans to officers, business transactions with board members, or grants to related organizations. Unusual entries here warrant further investigation.

The Telemarketer Problem

Some charities — particularly those soliciting by phone — contract with professional fundraising firms that retain a large percentage of every dollar collected. It is entirely legal. It is rarely disclosed during the solicitation call. In some documented cases, the telemarketer keeps 85 to 90 cents of every dollar raised, remitting only 10 to 15 cents to the charity itself. The 990 will sometimes reveal these arrangements under Schedule G, which covers fundraising events and third-party solicitations. If you receive a phone solicitation, ask directly: “What percentage of my donation goes to the charity versus the fundraising company?” A legitimate organization will answer.

Using Watchdog Ratings — Correctly

Charity Navigator, the Better Business Bureau’s Wise Giving Alliance, and CharityWatch are the three most prominent charity watchdog organizations in the United States. Each uses different methodology, and each has meaningful limitations that donors rarely appreciate.

What the Ratings Actually Measure

Charity Navigator’s numeric scores (recently revised to a Beacon system) weight financial health, accountability, and transparency. CharityWatch assigns letter grades and focuses heavily on the program expense ratio. The BBB’s Wise Giving Alliance evaluates against 20 standards covering governance, finances, and solicitation practices.

None of these systems reliably measures impact — that is, whether the programs actually work. A charity can earn four stars, maintain excellent financial ratios, and run programs that produce no demonstrable benefit. Conversely, an experimental or early-stage nonprofit may not yet have the infrastructure to earn a high rating but may be producing real, verifiable results on the ground.

How to Use These Tools Effectively

• Use watchdog ratings as a filter, not a final verdict. A low rating or absence from the database warrants investigation. A high rating warrants further verification, not blind trust.
• Check multiple platforms. An organization may be rated by one watchdog and not another. Discrepancies between ratings are worth examining.
• Look at the date of the most recent evaluation. A four-star rating from 2019 reflects data from filings that may be five or six years old. Leadership changes, financial difficulties, and program shifts happen.

Verifying Impact: The Step Most Donors Skip

Financial health tells you how a charity manages money. It does not tell you whether the money is doing anything useful. For significant donations — anything above $500 is a reasonable threshold — it is worth investigating program outcomes directly.

Look for Specific, Measurable Claims

A charity’s website should describe its programs with specificity. “We feed hungry families” is not a program description. “We distributed 1.4 million meals through 47 food distribution sites in Broward County in 2023, reaching an estimated 18,000 individuals” is. If the organization cannot or will not describe its work in concrete terms, that absence is informative.

Check for Independent Evaluation

Some nonprofits commission independent program evaluations or participate in third-party effectiveness assessments. Organizations working in international development are increasingly expected to publish outcome data. Domestically, organizations in areas like early childhood education, workforce development, and housing have more robust evaluation cultures than others. Ask whether the charity has been evaluated by an independent party, and ask to see the results.

Read the Annual Report

Annual reports are marketing documents, but they still contain useful signals. A charity that publishes detailed, specific outcome data alongside financial information is behaving more transparently than one that publishes glossy photographs and vague mission statements. Look for the ratio of program narrative to emotional appeal. A high ratio of the latter suggests the organization is more skilled at fundraising than at reporting results.

Red Flags That Should Stop a Donation

Some signals are clear enough that they should prompt a donor to stop, verify, or redirect a gift entirely.

• Pressure tactics: Any solicitation that creates artificial urgency — “This offer expires in 24 hours” or “You must decide now” — is a manipulation technique inconsistent with legitimate charitable practice.
• Vague mission language: Organizations that cannot clearly explain what they do, for whom, and with what results should not receive donations before those questions are answered.
• Requests for cash, wire transfer, or gift cards: No legitimate charity solicits donations via gift card. Full stop.
• No mailing address or physical presence: Legitimate organizations maintain verifiable physical addresses. A website with only a contact form and a PayPal button is insufficient.
• Newly formed organizations following a disaster: Charitable fraud spikes after natural disasters and humanitarian crises. Organizations formed within weeks of a major event, before they could plausibly have established programs, are high-risk. Giving to established organizations with documented presence in the affected area is safer.
• Inability to produce a 990: Any organization that refuses to share its most recent Form 990 on request, or claims it doesn’t have one, is either operating illegally or hiding something.

A Practical Pre-Donation Checklist

For a donation of any meaningful size, the following sequence takes roughly 20 to 30 minutes and covers the most important bases:

• Confirm active 501(c)(3) status on the IRS Tax Exempt Organization Search using the EIN.
• Pull the most recent Form 990 on Candid and check the program expense ratio, executive compensation, and any Schedule L disclosures.
• Cross-check ratings on Charity Navigator and at least one other watchdog platform, noting the dates of the most recent evaluations.
• Visit the charity’s website and look for specific, measurable outcome claims — not just mission statements.
• Search the organization’s name alongside terms like “fraud,” “complaint,” “lawsuit,” and “investigation” in a general web search.
• If the donation is substantial, call the organization and ask to speak with someone who can explain their programs and outcomes. A healthy nonprofit welcomes that conversation.

Giving Well Is a Skill, Not Just an Impulse

Year-end giving pressure — the combination of tax deadlines, holiday sentiment, and aggressive solicitation campaigns — is not designed to help donors make good decisions. It is designed to compress the decision window. The donors who give most effectively are those who treat charitable giving the way they treat any other significant financial decision: with research, skepticism, and a clear standard for what they expect in return.

That standard does not have to be complicated. Program expenses above 75 percent of total costs. A current 990 that can be reviewed. Specific, verifiable program outcomes. Active IRS status. Those four criteria, applied consistently, will filter out the vast majority of fraudulent and ineffective organizations while leaving a strong field of legitimate nonprofits worthy of support.

The goal is not to make giving harder. It is to make it count. Thirty minutes of due diligence before a year-end donation is a reasonable investment in ensuring that your generosity actually reaches the people and causes it was meant to serve.