How to Vet a Charity: What Every Christian Donor Should Know

"The righteous care about justice for the poor, but the wicked have no such concern." — Proverbs 29:7 (NIV)

Quick Answer

Before giving large sums, evaluate a charity: Check their 501(c)(3) status (IRS.gov), review their 990 tax form (overhead ratio), visit their website and contact them directly, ask for annual reports, and check rating sites (Charity Navigator, GiveWell). Ten minutes of research prevents giving to ineffective or dishonest organizations.

The Core Questions

Before giving, ask:

1. Is it legitimate? Is it really a 501(c)(3)? Not a scam?
2. Is it aligned with my values? Does it do work I believe in?
3. Is it effective? Does it actually accomplish its mission?
4. Is it efficient? Does it use my donation wisely (low overhead)?
5. Is it transparent? Does it willingly share information?

How to Check Legitimacy

Method 1: IRS Tax Exempt Organizations Search

• Go to IRS.gov (search "Tax Exempt Organizations")
• Enter charity name
• Confirm it's listed as 501(c)(3)
• If not listed: Don't give (either a scam or not properly registered)

Method 2: Better Business Bureau (Charities)

• Visit give.org
• Search charity name
• BBB will show:
  • Legal status
  • Years in operation
  • Any complaints filed
  • Accreditation status

Method 3: State Attorney General

• Some states maintain charity registries
• Search your state's AG website
• Confirms registration in your state
• Shows any disciplinary history

Evaluating Mission and Impact

Questions to ask:

1. What specific problem does this charity solve? (Hunger? Homelessness? Gospel?)
2. How do they solve it? (Direct service? Advocacy? Research?)
3. Can they point to measurable outcomes? (How many people served? Lives changed?)
4. Do they have a theory of change? (Understanding of how their work leads to outcomes?)

Red flags:

• Vague mission ("We help people")
• No measurable outcomes ("We served thousands" but no specifics)
• Emotional appeals only ("Look at these sad pictures") without solutions
• Leadership changes frequently (instability)

Green flags:

• Clear mission statement
• Specific goals and outcomes
• Annual impact reports with numbers
• Long-serving, stable leadership
• Independent evaluation of programs

Evaluating Overhead and Efficiency

The "overhead ratio" is controversial, but useful:

Overhead ratio = (Administrative + Fundraising costs) ÷ (Total spending)

Interpretation:

• 35% overhead: $0.35 of every dollar goes to overhead; $0.65 to programs (good)
• 50% overhead: $0.50 to overhead; $0.50 to programs (mediocre)
• 70% overhead: $0.70 to overhead; $0.30 to programs (poor)

Where to find it:

• Charity Navigator (charitynavigator.org): Shows overhead ratio for thousands of nonprofits
• GiveWell (givewell.org): Detailed evaluations including cost-per-outcome
• Charity's 990 form (IRS): Shows all income and spending categories

But caveat: Overhead ratio isn't the whole story.

• Some effective programs require high overhead (research, training)
• Low overhead can indicate underfunding (inadequate staff)
• Judge in context of mission

Better approach: Look at both overhead AND outcomes.

• "This charity spends 40% on overhead but transforms 80% of clients' lives" is good
• "This charity spends 30% on overhead but has zero outcomes measured" is risky

The 990 Tax Form: Reading It Like a Financier

Every 501(c)(3) files Form 990 (or 990-N for tiny organizations).

Where to find it:

• ProPublica Nonprofit Explorer (projects.propublica.org/nonprofits)
• GuideStar (now Candid): guidestar.org
• Charity's own website (often in "transparency" section)

What to read:

1. Part I: Summary

   • Revenue (donations, grants, other income)
   • Expenses (by category)
   • Mission statement (clear or vague?)

2. Part VII: Compensation

   • Executive director's salary
   • Board member compensation
   • Red flag: Executive making $500k+ at small nonprofit with $1M budget

3. Part IX: Revenue and Expenses

   • Program expenses (what percentage?)
   • Management and general (overhead)
   • Fundraising costs
   • Green flag: Program expenses > 65%; Fundraising < 10%

4. Schedule O: Supplemental info

   • Often contains details on programs, changes, challenges
   • Read this for the "story"

Charity Ratings Sites

Charity Navigator (charitynavigator.org)

• Rates nonprofits on financial health, accountability, transparency
• Shows overhead ratio, financial trends
• Free; no subscription needed
• Search ~150,000+ nonprofits

GiveWell (givewell.org)

• Deeply evaluates select charities (mainly global health/poverty)
• Shows cost per life saved or improved
• Very thorough; focuses on impact per dollar
• Only evaluates ~50 organizations in-depth
• Useful if charity is in their database

Charity Watch (charitywatch.org)

• Letter grades (A+ to F) based on financial metrics
• Evaluates ~600 major nonprofits
• Free; accepts donations
• Simple, easy-to-understand ratings

Great Nonprofits (greatnonprofits.org)

• Donor reviews (like Yelp for charities)
• See what others experienced
• Helpful for smaller organizations
• Note: Reviews can be biased (disgruntled former workers)

The Direct Conversation

Before giving large amounts, contact the charity:

Call or email and ask:

1. "Can you send me your latest annual report?" (How responsive are they?)
2. "What percentage of donations goes to programs vs. overhead?" (Transparency?)
3. "Can you show me evidence of impact?" (Outcomes?)
4. "How do you measure success?" (Thoughtfulness?)
5. "Can I visit / see the work?" (Openness?)

What to notice:

• Are they responsive? (Within 1-2 days)
• Do they answer directly? (Or evade?)
• Do they have materials ready? (Suggests they're asked often; that's good)
• Are they welcoming of your visit? (Or discouraging?)

Red flag: They're evasive, slow to respond, or don't have impact data.

Sector-Specific Considerations

For faith-based organizations:

• Are they 501(c)(3)? (Some religious organizations are tax-exempt without this status)
• Do they align with your theological beliefs?
• Ask: What's your statement of faith? (Should be clear)

For international work:

• How do they partner with local organizations? (Avoid "white savior" charity)
• What's their sustainability plan? (Will work continue after you stop funding?)
• Are leaders from the region being trained?

For educational organizations:

• What's the student-to-staff ratio?
• Where do graduates go? (Track record?)
• What's the graduation/completion rate?

For health organizations:

• Are they evidence-based? (Using proven interventions?)
• What's their overhead structure? (Hospital overhead legitimately higher)
• Do they publish outcomes in medical journals?

Common Charity Scams to Avoid

Scam 1: High-pressure fundraising

• "Give now; don't have time to think"
• Reality: Legitimate charities encourage reflection
• Avoid: Pressure sales tactics

Scam 2: Emotional exploitation

• Images of suffering without explanation of solutions
• Reality: Legitimate charities show both problem AND response
• Avoid: Manipulation without substance

Scam 3: Celebrity endorsement without substance

• "A celebrity gave; you should too"
• Reality: Celebrity involvement doesn't validate effectiveness
• Avoid: Assuming celebrity involvement = legitimacy

Scam 4: Vague cause

• "We help people" (What people? How?)
• Reality: Legitimate charities have specific missions
• Avoid: Inability to describe concrete work

Scam 5: Promises of tax benefits that seem too good

• "Give $10,000, get $20,000 tax deduction"
• Reality: Deductions match donations
• Avoid: Overstate deduction claims

The Stewardship Angle: Proverbs and Giving Wisely

Proverbs 14:15 (NIV): "The simple believe anything, but the prudent give thought to their steps."

Christian stewardship includes wise giving. You're accountable not just for whether you give, but for to whom and how much.

Proverbs 21:5: "The plans of the diligent lead to profit, as surely as haste leads to loss."

Due diligence on charities is diligent stewardship.

Practical Vetting Checklist

Before giving >$1,000:

• Confirm 501(c)(3) status (IRS.gov)
• Read their website and mission (clear and specific?)
• Find their 990 form (ProPublica)
• Check overhead ratio (aim for <50%)
• Look for impact data (outcomes, not just activity)
• Check charity ratings (Charity Navigator, GiveWell)
• Contact charity directly (responsive? transparent?)
• Ask for annual report and donor references
• If possible, visit or see the work
• Trust your instinct (Does this feel right?)

For smaller gifts ($100-$1,000):

• Quick check: 501(c)(3) status + mission statement
• Read one review on Great Nonprofits
• Trust and try

How to Report Charity Fraud

If you discover a charity is fraudulent:

1. Report to IRS: irs.gov/Charities-&-Non-Profits (form 13909)
2. Report to FTC: reportfraud.ftc.gov
3. Report to state AG: Search your state's website
4. Report to BBB: report.bbb.org

Sources

• IRS Tax Exempt Organizations — irs.gov
• Charity Navigator — charitynavigator.org
• GiveWell research — givewell.org
• Charity Watch methodology — charitywatch.org
• Form 990 instructions — IRS Publication 557
• Proverbs 14:15, 21:5 exegesis — Matthew Henry's Commentary

Giving wisely is stewardship. Before you donate, do ten minutes of research. Your money will do more good when directed to effective, honest organizations.