Five questions donors should ask when vetting a nonprofit
There are many ways that potential donors can make sure a nonprofit is well-run and compliant with state and federal rules. "Be willing to do your own research," said Kris Kewitsch, executive director of Charities Review Council in Roseville, which rigorously reviews nonprofits. "The majority of nonprofits are doing amazing things."
- Is the nonprofit or charity registered with the state and the IRS? Go to ag.state.mn.us to see if a charity is registered in Minnesota and irs.gov to look up a tax-exempt organization. Feeding Our Future had a lapsed nonprofit status with the IRS, and the Attorney General's Office withdrew Feeding Our Future as a registered charity in Minnesota in October 2021 after trying and failing to get required tax forms and reports from it since 2019. Officials with the nonprofit said the state had sent the notice to the wrong address and immediately filed the proper paperwork. Attorneys say it's not uncommon for small nonprofits to miss deadlines for documents or have their registration lapse, but it still can be a red flag.
- Does the nonprofit disclose required financial data? Nonprofits are required to publicly disclose financial data. Contact the Attorney General's Office at 651-757-1496 to request the organization's annual report and Form 990, which includes key financial data and a list of board members. You can also get a copy of Form 990 online at IRS.gov.
- Does the nonprofit have a board of directors providing proper oversight and governance? Under Minnesota law, a nonprofit must have at least three board members who are considered fiduciaries, responsible for oversight. According to the Attorney General's Office, board members must attend board meetings and written minutes must be taken at each meeting. The board president of Feeding Our Future told the New York Times he had been "tricked" into taking the job by a friend and had nothing to do with oversight.
- Is the nonprofit transparent in how donations are spent? Ask the charity how it will use your donation and if it's tax exempt. The Charities Review Council recommends that at least 65% of a charitable organization's expenses go toward program services. Make sure the organization clearly states how your donation will make a difference, Kewitsch said, and don't yield to pressure to give. "You should feel comfortable saying no and asking for more information," she said. You can also volunteer with the organization and see their work firsthand. Most nonprofits have a website describing their mission and programs, listing top staff members and board members and disclosing financial audits. Some grassroots organizations may not have a website, but they should have a phone number to call for that information.
- Does the nonprofit meet sector standards? Many organizations evaluate whether charities are accountable and transparent. Go to smartgivers.org to check if a nonprofit meets the Charities Review Council's 25 standards. The New Jersey-based Charity Navigator (charitynavigator.org) rates charities based on its financial and accountability standards, while guidestar.org awards "Seals of Transparency" to nonprofits. The Better Business Bureau also evaluates some charities at give.org.