Charities Information for the Public
Minnesota residents are among the most generous in the nation. For many donors, a difficult aspect of choosing a charity to support is ensuring that it will use the donation as intended—to further its charitable purpose. While many charities use the majority of the donations they receive to benefit a charitable mission, some do not. States used to require that a certain percentage (for example, 75%) of a charitable donation go toward the charity’s mission. The United States Supreme Court, however, invalidated several such laws on First Amendment grounds. These rulings make it critical for donors to do their homework to ensure a charity is reputable and that their donation will actually go to a charitable purpose.
Tips on Researching Charities
Donors should research any charity to which they are considering donating. Below are some tips on how to do so:
See if the charity is registered. You can search to see if a charity has registered with the Attorney General’s Office using the Office’s “Search for Charities” webpage. It can be a red flag if a charity is not registered. At the same time, being registered does not constitute approval of a charity’s activities, or ensure that a certain percentage of your donation will actually be used for a charitable purpose.
Contact the Attorney General’s Office. Donors can contact the Attorney General’s Office at (651) 757-1496 or (800) 657-3787. The Attorney General’s Office can answer basic questions about a charity, send you a copy of a charity’s annual report (which must be filed with the Office), and provide other tips on charitable giving.
Ask if the charity uses a “Professional Fundraiser.” Some charities hire for-profit companies to solicit donations for them. These companies are called “professional fundraisers.” A professional fundraiser typically gets a “cut” of each donation made by the public. This fundraising fee reduces the amount that goes to the charity. You should determine if a charity uses a professional fundraiser. If it does, find out the percentage of your donation that will go to the for-profit professional fundraiser versus the charity.
Professional fundraisers are required to register with the Attorney General’s Office. You can check if a professional fundraiser is registered with the Attorney General’s Office using the “Search for Professional Fundraiser” webpage.
Review the charity’s “990.” Most charities must file tax returns with the IRS. These are called Form 990. A charity’s tax return (i.e., its “990”) contains helpful information about the charity. You may access a charity’s 990 for free electronically at the website www.guidestar.org. You may also obtain a copy of a registered charity’s 990 by calling the Attorney General’s Office at the telephone numbers listed above.
Contact the Minnesota Charities Review Council. The Charities Review Council is a private nonprofit organization that rates and evaluates other charities. It also provides suggested guidelines that it recommends charities follow, including not using more than a certain percentage of donations on fundraising and overhead. You may access the Council’s website at www.smartgivers.org, or contact the Council as follows:
Minnesota Charities Review Council
700 Raymond Avenue, Suite 160
St. Paul, MN 55114
(651) 224-7030 or (800) 733-4483
Contact the Better Business Bureau’s Wise Giving Alliance. The BBB’s Wise Giving Alliance also evaluates and issues reports about charities. You can access the Alliance’s website and review information about a charity at www.give.org, or contact the Alliance as follows:
BBB Wise Giving Alliance
3033 Wilson Blvd, Suite 600
Arlington, VA 22201
Contact the IRS. The IRS is the federal agency that gives charities their tax-exempt status. The IRS may revoke a charity’s tax exempt status if it acts improperly. You may review the IRS’s Charities & Non-Profits webpage which has more information about this and other nonprofit issues. You may also call the IRS at 1-877-829-5500 to check on a charity’s tax-exempt status.
Tips on Avoiding Common Scams
Donors should be aware of charity scams. A few of the more well-known charities scams are:
Sham Charities. Some individuals set up a charity that uses little or none of a donor’s donation to benefit a charitable purpose. These charities typically pick a sympathetic cause to target the heartstrings of the generous, but then use most or all of the donations for fundraising expenses or to line the pockets of the charity’s fundraisers, executives, family members, or friends.
Sound-Alike Organizations. Scammers may attempt to impress a prospective donor with a respectable-sounding name or a name similar to a well-known charity. These charities try to capitalize on donors who do not ask questions or confirm to which charity they are actually donating. By the time the donor realizes the difference, it is too late.
High Pressure Tactics. Reputable charities will be happy to receive a contribution whenever a donor is ready to donate. Some charities use high-pressure tactics to solicit donations, but fail to explain how the donation will be used. These types of charities often tell donors it is “critical” that they donate “immediately.”
False Pledge Claims. Sometimes donors get telephone calls or mailings claiming that they have previously pledged to donate a certain amount (for example, $20) to the charity. In fact, no such pledge was ever made. These claims are designed to make it more difficult for the person to turn down the solicitor’s request for a donation.
In addition to the above sources of information, the Attorney General’s Office makes available the following materials, which provide more information about Minnesota’s charities laws and charitable giving:
- Giving to Charities—Know the Facts, Avoid the Scams, and Other Tips on Charitable Giving
- A Guide to Minnesota’s Charities Laws
- Raising Funds for Named Individuals
- Fiduciary Duties of Directors of Charitable Organizations: A Guide for Board Members
- Charitable Athletic Events—How to Stay On Course
Reporting Questionable Practices
Donors play an important role in helping ensure that charities in Minnesota operate with integrity and fulfill their charitable mission. If you believe that a charity is soliciting funds in Minnesota without being properly registered with the Attorney General’s Office, or is engaged in other questionable activities, please report it to our Office by calling (651) 757-1496 or (800) 657-3787, or by submitting a Nonprofit/Charities Report form to:
Office of Minnesota Attorney General Lori Swanson
445 Minnesota Street, Suite 1400
St. Paul, MN 55101