GuideStar profiles all the tax-exempt organizations included in the IRS Business Master File. The information provided comes from IRS data and from the organizations themselves. Nonprofits can choose to “claim” their profiles and offer supplemental information, such as an audited financial report. Depending on how much information they provide, nonprofits are awarded the platinum, gold, silver, or bronze seal of transparency. A reputable organization will have a clear mission statement, “measurable goals,” and concrete achievements, according to GuideStar’s giving guide.
If the charity you’d like to donate to is not in the GuideStar database, GuideStar recommends you ask to see its IRS letter of determination. Try to contact the organization directly through its website. If you ask for clarification or additional information and the organization does not respond, Enterline Fekeci says that’s a red flag. If an IRS-recognized, tax-exempt organization is violating the law (engaging in commercial, for-profit business activities, excessive lobbying activities, etc.), you can report them here.
Research will help you make an informed decision, and it can help other donors as well. GoFundMe uses fraud-prevention technology, but it also relies on its community to report any campaigns that misuse the platform, which could involve organizers posting misleading information about a campaign or failing to deliver funds to the intended beneficiary. If GoFundMe discovers misuse, the company may refund up to $1,000 per donor.
Fraudulent campaigns make up less than one-tenth of one percent of campaigns on GoFundMe, but there’s risk nevertheless. A New Jersey couple and a veteran experiencing homelessness are facing criminal charges after reportedly making up their GoFundMe campaign story, which raised over $400,000. GoFundMe says it is fully cooperating and assisting law enforcement officials to recover the money. Everyone who contributed to the campaign will receive a full refund.
“While this type of behavior by an individual is extremely rare, it’s unacceptable and clearly it has consequences,” a GoFundMe spokesperson said in a statement. “Committing fraud, whether it takes place on or offline is against the law.”