You're about to give money away. Maybe it's a hundred bucks to a local animal shelter or a massive corporate grant to a new environmental foundation. You feel good. But then a nagging thought hits: is this actually a tax-exempt organization? Honestly, if you don't verify 501 c status before you hit "send" on that donation, you're playing a risky game with the IRS.
It happens more often than you’d think. Scams are everywhere, sure, but more common are the "accidental" lapses where a nonprofit simply forgot to file their Form 990 for three years and got their status auto-revoked. If that happens, your tax deduction vanishes. Poof.
The IRS Tax Exempt Organization Search is your best friend
Most people think they need to hire a lawyer or a private investigator to check out a charity. You don't. The IRS actually maintains a surprisingly functional database called the Tax Exempt Organization Search (TEOS) tool. It’s the gold standard. When you need to verify 501 c status, this is your first and most important stop.
Don't just search by name. Names are tricky. There are probably five hundred "Save the Paws" organizations in the United States. Instead, ask the nonprofit for their Employer Identification Number (EIN). It’s a nine-digit number that acts like a Social Security number for businesses. If a charity is hesitant to give you their EIN, that's a massive red flag. Huge.
Once you have that EIN, plug it into the TEOS. The system will tell you if they are eligible to receive tax-deductible contributions. It also shows you their recent filings. If the last thing they filed was in 2019, you should probably ask some hard questions before opening your wallet.
Publication 78 and why it matters
There is this thing called Publication 78. Historically, it was a giant printed list of every organization that could receive tax-deductible gifts. Now, it’s integrated into the online search. When you verify an organization, look for the "Pub 78 Data" indicator. This is the specific green light that tells you, "Yes, the IRS says you can deduct this."
But wait. There’s a catch.
Some organizations, like churches or small nonprofits with less than $5,000 in annual gross receipts, aren't actually required to apply for formal 501(c)(3) recognition to be tax-exempt. They just are. This makes verifying them a bit of a nightmare. If you’re dealing with a house of worship, you might not find them in the database, even if they’re totally legit. In those cases, you have to look at their affiliation with a larger denomination or ask for a letter of determination from their parent organization.
What happens when a nonprofit goes dark?
Revocation is a dirty word in the nonprofit world. The IRS is pretty strict: if a 501(c) organization fails to file its required annual return (the Form 990 series) for three consecutive years, their tax-exempt status is automatically revoked. No warnings. No phone calls. Just a letter in the mail and a spot on the "Auto-Revocation List."
🔗 Read more: How Long Will Retirement Savings Last Calculator: What Most People Get Wrong
I've seen passionate, well-meaning people run organizations for years without realizing they've lost their status because their treasurer moved away and stopped filing paperwork. If you donate to a revoked org, you aren't getting that deduction. Period.
To verify 501 c status thoroughly, check the "Revocation" tab on the IRS website. If you see the organization's name there, stay away until they can prove they’ve been reinstated. Reinstatement isn't instant. It involves a mountain of paperwork and usually a hefty fee.
Don't ignore the sub-types
We talk about 501(c)(3) like it's the only one. It isn't. There are dozens of variations.
- 501(c)(4) organizations are social welfare groups. They can do some lobbying. Your donation to them? Usually NOT tax-deductible.
- 501(c)(6) groups are things like Chambers of Commerce or trade leagues. Again, not deductible as a charitable contribution (though maybe as a business expense).
- 501(c)(7) are social clubs, like your local golf club or frat house. Definitely not deductible.
If you are trying to verify 501 c status specifically for tax benefits, you are almost always looking for that (3) at the end. If it’s any other number, talk to your CPA before you assume you're getting a break on your 1040.
Third-party watchdogs and the "vibe check"
The IRS tells you if they are legal. They don't tell you if they are good.
A charity can be perfectly legal and still be a disaster. Maybe they spend 90% of their revenue on "consultants" (which is often just a fancy word for professional fundraisers) and only 10% on the actual cause. To get the full picture, you need to go beyond the IRS.
- GuideStar (now Candid): This is the pro level. They aggregate 990 forms and provide "seals of transparency." A Gold or Platinum seal means the nonprofit is sharing way more than the bare minimum.
- Charity Navigator: They use a star rating system. It’s great for a quick glance at financial health and accountability.
- The Better Business Bureau (BBB) Wise Giving Alliance: They look at governance. Does the board actually meet? Do they have a conflict-of-interest policy?
Honestly, sometimes a simple Google search for the organization's name plus the word "scam" or "lawsuit" reveals more than a 990 ever could. If the CEO is making $2 million a year while the "shelter" is a shed in a backyard, you'll likely find a local news report about it.
The Determination Letter: The "Birth Certificate"
If you're doing a large transaction, ask the nonprofit for their IRS Determination Letter. This is the official document the IRS sends when they approve an application for exempt status. It lists the date of the ruling and the specific section of the code they fall under.
👉 See also: Can President Fire Fed Chair? What Really Happens Behind Closed Doors
Any legitimate nonprofit will have a PDF of this ready to email you in thirty seconds. If they act confused or tell you it's "private," walk away. There is nothing private about tax-exempt status. It is a public covenant. They get to avoid taxes, and in exchange, they agree to be transparent with the public. That’s the deal.
Specific states have their own rules
Just because the federal government says they are okay doesn't mean the state is happy. Most states require nonprofits to register with the Attorney General’s office or a Secretary of State before they can even ask for money.
California, for example, has the Registry of Charitable Trusts. If a charity is "Delinquent" in California, they are prohibited from soliciting or spending money, even if their federal 501 c status is technically active. It's a second layer of protection you’d be wise to use.
Practical Steps to Verify Status Right Now
Don't overcomplicate this. If you’re at your desk and need to check a group out, follow this sequence.
Grab the EIN. Look at the bottom of the charity's website, usually in the footer. If it’s not there, check their "About" page or "Donate" page. If you still can't find it, use the search bar on Candid/GuideStar.
Use the TEOS. Go to the IRS Tax Exempt Organization Search page. Select "Check for Eligibility" and type in that EIN.
💡 You might also like: Exact Sciences Corp Stock: What Most People Get Wrong About the Abbott Buyout
Read the 990. Look at the most recent filing. Check Part IX, the Statement of Functional Expenses. Look for how much they spend on "Program Services" versus "Management and General" or "Fundraising." If Program Services is less than 65-70%, keep looking.
Confirm the Name. Make sure the check you write matches the name on the IRS record. If the IRS says the name is "Helping Hands of Topeka" but they're asking you to make the check out to "John Doe," you are being scammed.
Check the State Registry. If you're giving a large amount, spend five minutes on your state's Attorney General website to make sure they are "In Good Standing."
Verification isn't about being cynical. It's about being a good steward of your money. Every dollar that goes to a fake or revoked charity is a dollar that didn't go to a real one. Spend the ten minutes to do the math and check the database. Your tax return—and your conscience—will thank you.
Once you have verified the EIN and checked the IRS database, save a PDF of the search results for your tax records. If the IRS ever audits your charitable contributions, having a timestamped proof that the organization was listed as eligible on the date of your donation is the ultimate "get out of jail free" card. Document everything. Legitimate charities love transparency; don't be afraid to ask for it.