How to make sure charitable donations are going to a good cause

Published On: Mar 14 2013 05:42:48 PM EDT


Words like shameful, callous and despicable have now been used to describe the actions of  Allied Veterans of the World.

Over the last five years, investigators say Allied Veterans of the World took in about $290 million and promised to give 70 percent to charity.  Investigators say that only 2 percent actually were given to veterans organizations or other charitable activities.

So how does someone know if money you are donating is going to a good cause?

All registered non-profit groups must turn in annual reports to the Internal Revenue Service, and several reputable organizations go through that data to see how the money was spent.

The Better Business Bureau's reviews area 501c3 charitable organizations' IRS filings and their audited financial reports, looking at total revenue versus expenses and how much was spent on administrative fees.  It also tracks complaints against non-profit organizations, and allows people to file a complaint.

"If the IRS see's less and less of the funds are doing what they are supposed to do, they are at risk of losing their 501c3 status," said Tom Stephens, president of the local Better Business Burearu. "What percentage of the money went to the projects that they actually collected the money for, and what percent was spent on administration."

The BBB's Gift Giving Guide gives each organization a pass-or-fail grade.

Stephens says donors should raise concerns if they ask for the non-profits annual report and they don't hand it over.

In the case of Allied Veteran's, Stephens says the charitable organization now accused of money fraud does not fall under the oversight of the Better Business Bureau or some other services non-profit organizations becase it is not a 501c3, but a 501c19.

So who monitors those aside from the IRS?  No one.
Rod Sullivan, professor at Florida Coastal School of Law, says the state leaves the responsibility up to the consumer.

"The state of Florida publishes a list called the Gift Giver's Guide where you can check out any organization... where people can see how they spend that money," Sullivan said.

Other links for information about non-profit organizations:


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