How to Check if a Nonprofit is Legitimate: IRS & Form 990 Guide

Last reviewed: June 1, 2026 · Written by James Carter, Consumer Rights Researcher · Reviewed by HowToReport Editorial Desk · Independent resource — not a government site

How Do I Report Check if a Nonprofit is Legitimate?

Verifying a nonprofit requires checking their tax-exempt status through official IRS databases. Reviewing this documentation confirms the organization operates legally and ensures your donations are tax-deductible. Examining third-party charity evaluators provides additional insight into how efficiently the group manages its funds and programs.

1. Gather Evidence: Obtain the organization’s exact name and Employer Identification Number.
2. File Your Report: Search the IRS Tax Exempt Organization Search tool to confirm their status.
3. Follow Up: Review their ratings on charity watchdogs like Charity Navigator or GuideStar.

Every year, generous Americans donate hundreds of billions of dollars to support medical research, military veterans, disaster relief, and animal welfare. However, deceptive telemarketers and predatory bogus charities exploit public goodwill—diverting millions into private pockets while delivering negligible assistance to actual causes. Knowing how to check if a nonprofit is legitimate protects your hard-earned funds, ensures your contributions are tax-deductible under federal law, and triggers regulatory enforcement against sham charities.

Federal tax law imposes strict regulatory standards on tax-exempt entities. Under Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. § 501), an organization must operate exclusively for exempt purposes, with none of its net earnings inuring to the benefit of private shareholders or individuals. In addition, organizations must file an annual information return (IRS Form 990), which is an open public record by law. When deceptive operations mislead the public regarding program spending, they violate federal and state charitable solicitation laws. This guide provides the complete forensic verification methodology: IRS database queries, Form 990 spending audits, state regulatory checks, and a formal dispute letter template.

Figure 1: Auditing direct-mail charity solicitation letters and fundraising brochures for required disclosures.

Step 1: Verifying Tax-Exempt Status on the IRS TEOS Database

The single most authoritative check for any charity is the official database maintained by the federal government. A group may call itself a “nonprofit,” but only groups verified by the IRS can offer tax-deductible donation receipts:

1. Access the IRS TEOS Tool: Visit the official IRS Tax Exempt Organization Search (TEOS) portal on IRS.gov.
2. Search by Employer Identification Number (EIN): Every legitimate nonprofit possesses a unique 9-digit federal Employer Identification Number (EIN). Request this number from the organization or locate it on their donation materials. Searching by EIN eliminates confusion between organizations with similar names.
3. Verify Deductibility Status: Check the “Deductibility Status” column. Only entities holding Section 501(c)(3) status allow donors to claim federal charitable income tax deductions under 26 U.S.C. § 170. Other groups (such as 501(c)(4) social welfare groups or 501(c)(6) business leagues) are tax-exempt but donations are not deductible as charitable gifts.
4. Check the Auto-Revocation List: The IRS automatically revokes the tax-exempt status of any nonprofit that fails to file required annual returns (Form 990) for three consecutive years. Ensure the organization does not appear on the IRS Automatic Revocation of Exemption List.

Figure 2: Auditing IRS Form 990 financial statements, administrative ratios, and program spending percentages.

Step 2: Auditing IRS Form 990 Financial Ratios

Legitimate 501(c)(3) organizations are required by federal statute to make their annual information return (Form 990) available for public inspection. You can view Form 990 filings free on IRS TEOS, GuideStar (Candid), or ProPublica Nonprofit Explorer. When auditing Form 990, focus on three key metrics:

• The 65/35 Program Spending Rule: Established watchdog agencies (such as the Better Business Bureau Wise Giving Alliance and CharityWatch) set minimum standards: at least 65% to 75% of total expenses should be spent directly on program activities. If Form 990 Part IX shows that 70% of funds went to professional telemarketing solicitors and executive salaries, the organization is functioning as a private fundraising vehicle.
• Executive Compensation & Officer Loans: Examine Part VII (Compensation of Officers and Directors) and Schedule L (Transactions with Interested Persons). High six-figure salaries paid to family members or undocumented insider loans are severe governance red flags.
• Professional Fundraising Fees: Review Part IX, Line 11e. Deceptive charities routinely pay 80% to 90% of all donor contributions directly to third-party telemarketing firms (for-profit fundraisers).

Figure 3: Checking 501(c)(3) tax-exempt status on the official IRS Tax Exempt Organization Search (TEOS).

Step 3: Checking Independent Watchdogs and State Registries

Beyond the IRS, independent charity watchdogs perform deep analytical reviews of nonprofit governance and donor privacy policies:

• Charity Navigator: Evaluates nonprofits on a 4-star system across financial health, accountability, and transparency. Look for a 3-star or 4-star rating before donating.
• Candid (GuideStar): Awards Bronze, Silver, Gold, and Platinum Seals of Transparency based on the level of public disclosure provided by the organization.
• State Charities Bureau / Attorney General Registration: Over 40 states mandate that charities and professional fundraisers must register with the State Charities Bureau before soliciting funds in that state. Check your State Attorney General’s online charity registry. Unregistered solicitations violate state law.

Figure 4: Evaluating nonprofit governance scores, accountability metrics, and Charity Navigator financial ratings.

How to Report a Fraudulent or Sham Charity

If you identify an organization masquerading as a tax-exempt entity, misrepresenting how donations are used, or operating without required state licenses:

1. Submit IRS Form 13909: File an official Tax-Exempt Organization Complaint (Referral) Form 13909 with the IRS Exempt Organizations Examination Division. Attach marketing brochures, donor receipts, and financial evidence.
2. Lodge a Complaint with Your State Attorney General: Contact your state’s Public Charities Bureau. State AGs have sweeping legal authority to dissolve fraudulent nonprofit corporate charters, freeze bank accounts, and bar corrupt board members from future charity governance.
3. Report Telemarketing Fraud to the FTC: File an enforcement complaint at ReportFraud.ftc.gov, detailing caller ID spoofing, pressure tactics, and refusal to provide written disclosure packages.

Figure 5: State Charities Bureau and Attorney General Public Charities Division regulatory oversight office.

Small Claims Court and Civil Restitution

If you made a substantial donation based on fraudulent representations or if a charity debited recurring payments from your account without consent, you can sue in Small Claims Court to recover actual damages under state consumer protection statutes.

Consult our state guide: 50-State Small Claims Limits & Statute of Limitations Directory to confirm the monetary recovery limits in your local court.

Formal Dispute Letter: Demand for Return of Fraudulent Donation

Send this formal demand letter via USPS Certified Mail with Return Receipt Requested to the organization’s executive leadership and state regulatory bureau.

[Your Full Legal Name]
[Your Mailing Address]
[City, State, ZIP Code]
[Your Telephone Number]
[Your Email Address]

Date: [Date of Notice]

SENT VIA CERTIFIED MAIL: [Certified Mail Tracking #]
RETURN RECEIPT REQUESTED

[Nonprofit Organization / Entity Name]
[Attention: Board of Directors / Chief Executive Officer]
[Corporate Headquarters Address]
[City, State, ZIP Code]

Re: FORMAL DEMAND FOR RETURN OF CHARITABLE DONATION INDUCED BY MATERIAL 
    MISREPRESENTATION AND NOTICE OF INTENT TO REFER TO REGULATORS
    Donation Receipt / Reference Number: [Receipt #]
    Date of Contribution: [Date of Donation]
    Amount Contributed: $[Dollar Amount Donated]

To the Board of Directors:

I am writing to issue a formal demand for an immediate, full refund of the charitable contribution of $[Dollar Amount Donated] made to [Nonprofit Organization Name] on [Date of Donation].

FACTUAL BASIS FOR DEMAND & STATUTORY VIOLATIONS:
My contribution was directly induced by material misrepresentations made by your organization's promotional materials and fundraising solicitors regarding [cite misrepresentations, e.g., claiming 100% of proceeds fund veteran housing, falsely asserting active 501(c)(3) tax-exempt status, misrepresenting local community programs].

A subsequent audit of IRS records and Form 990 filings reveals:
1. MATERIAL MISREPRESENTATION OF CHARITABLE SPENDING:
Contrary to your representations that funds would directly support [Stated Purpose], public Form 990 filings reveal that over [Percentage, e.g., 85%] of all donor contributions are absorbed by for-profit telemarketing firms and administrative overhead, with less than [Percentage, e.g., 10%] allocated to actual program services.

2. LACK OF MANDATORY STATE CHARITABLE REGISTRATION:
An inquiry with the [Your State] Attorney General Charities Bureau confirms that your organization failed to maintain active charitable solicitation registration in this state prior to soliciting my contribution, in violation of [State Charitable Solicitations Act § Number].

FORMAL DEMAND FOR PAYMENT:
I hereby demand that [Nonprofit Organization Name] deliver a full refund of $[Dollar Amount Donated] by cashier's check payable to my name within fifteen (15) calendar days of your receipt of this certified letter.

If full restitution is not delivered within 15 calendar days, I will immediately submit formal investigative referrals to:
1. The Internal Revenue Service (IRS) Exempt Organizations Examination Division via Form 13909.
2. The Office of the Attorney General of [Your State] (Public Charities & Consumer Protection Divisions).
3. The Federal Trade Commission (FTC) ReportFraud division.

In addition, I reserve the right to initiate civil litigation in Small Claims Court to recover the full sum contributed, plus statutory interest and court costs.

Govern yourselves accordingly.

Sincerely,

___________________________________________
[Your Signature]

[Your Printed Name]

Enclosures:
Exhibit A: Copy of Donation Receipt / Cancelled Check / Bank Charge
Exhibit B: Copies of Misleading Promotional Literature / Solicitation Scripts

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