How to Check the Nonprofit Status of an Organization
Learn how to easily check the nonprofit status of an organization with this step-by-step guide, including IRS tools and state-level resources for verification. 5 min read updated on October 03, 2024
Key Takeaways:
Verify nonprofit legitimacy using IRS tools to ensure tax-exempt status.
Confirming nonprofit status enables you to claim tax-deductible donations.
Cross-reference IRS, state, and third-party directories for accurate verification.
Ensure financial transparency by reviewing nonprofit directories.
One of the many reasons why donors and businesses want to find out if an organization is a nonprofit is to make sure their contributions are actually going towards social or public benefit. In addition to this, many nonprofit organizations might want to check their nonprofit status for tax exemptions. In this guide, you will learn how to find out if an organization is a nonprofit, how to interpret the information you will find, and some common mistakes to avoid.
What Is a Nonprofit Organization?
A nonprofit organization is a legal entity that is created for charitable or social causes, rather than for generating profit for company owners or investors. There are many different types of nonprofit organizations. Some of the most common types of nonprofit organizations in the U.S. are:
501(c)(3): This type of nonprofit organization is recognized by the IRS as tax-exempt since it operates for charitable, religious, educational, or scientific causes.
501(c)(4): These are social welfare organizations. They engage in lobbying for policy change and other political activities for the welfare of society.
501(c)(6): These are associations of individuals who share common business interests, such as chambers of commerce, real estate boards, and boards of trade.
Why It’s Important to Verify Nonprofit Status
Knowing how to verify the nonprofit status of an organization can help you make sure your contributions are going exactly where you intend them to. If you are a donor or a business partnering with a nonprofit, you should verify the nonprofit status of an organization to protect yourself from fraud. It will also help you claim tax deductions for your donations. Below is a list of reasons why it is important to verify nonprofit status:
Ensuring Legitimacy: By confirming that the organization you want to donate to partner with is a nonprofit, you can protect yourself from fraud and ensure that your contribution is being used in the way you intended it to be.
Tax Benefits: Donations to 501(c)(3) organizations are tax-deductible. Without verifying the nonprofit status, you cannot claim these deductibles on your tax return, or else you may be at risk of being charged with tax fraud.
Transparency: For those who want to start a nonprofit organization, they must verify their status. This is because nonprofits are required to file annual reports with the IRS and disclose their financial health as well as how their funds are being utilized.
Compliance: In addition to filing annual reports with the IRS, verifying your status as a nonprofit can help you ensure that your organization meets all regulatory requirements.
How to Check the Nonprofit Status of an Organization
There are several ways you can find out if an organization is a nonprofit. Below are some common methods.
Using the IRS Tax Exempt Organizations Search Tool
The IRS provides an online tool called the Tax Exempt Organization Search Tool, which allows you to verify a nonprofit's status.
You can use this tool and find out if an organization is a nonprofit by following the steps below:
Step 1: Visit the IRS Website
Head over to the IRS website and access the Tax Exempt Organizations Search Tool here.
Step 2: Enter the Organization's Details
Choose which database you want to search in, as well as the city, state, and country where the organization is located. Then select whether you want to search by the organization’s name or their Employee Identification Number (EIN).
Finally, if you are choosing to search by the organization’s name, enter the name of the nonprofit in the ‘Search Term’ input field. If you know the organization’s EIN, then enter that instead.
Step 3: Review the Results
Once you have correctly entered all the required details, the tool will display the organization's tax-exempt status. This will help you determine if an organization is a nonprofit and whether it can receive tax-deductible contributions.
Checking State-Level Registrations
Another way you can find out if an organization is a nonprofit is by checking state-level registrations. In many cases, nonprofit organizations have to register with state charity regulators. You can search state-level databases to see if the organization is registered there. Just follow the simple steps below.
Step 1: Identify the Relevant State Database
Every state has its own database, which you can access to find out if an organization is a nonprofit. To use this method, you must know which state the organization is registered in.
Step 2: Search by Organization Name or EIN
Once you can confirm which state the organization is registered in, use the organization's name or EIN to search the relevant state database.
Step 3: Review the Registration Status
After correctly entering all the required information, the database will indicate whether the organization is registered as a nonprofit.
Using Third-Party Nonprofit Directories
If you would rather not use the IRS or the state databases, you can use third-party nonprofit directories like Guidestar and Charity Navigator to find out if an organization is a nonprofit.
All you have to do is head over to their website and then search by the organization’s name to find their profile. On Guidestar, you will be able to access details such as financial reports, mission statements, etc. Charity Navigator will give you additional information such as the ratings of the organization based on their financial health, accountability, and transparency.
What Information You’ll Find When Checking Nonprofit Status
When you verify a nonprofit’s status, you’ll typically find the following information:
Whether the organization is recognized as a nonprofit by the IRS.
Information on the organization’s tax-exempt status, including whether donations are tax-deductible.
Financial reports detailing how the organization uses its funds, including the percentage spent on programs versus administrative costs.
All of this information will help you decide if you should make a donation to the organization or initiate a partnership or collaboration with them. If you are starting a nonprofit, this information will help you understand how the laws and regulations will apply to you.
Common Mistakes to Avoid When Checking Nonprofit Status
Sometimes the information you get from using these databases can be a little confusing. To make sure you can interpret the information correctly, avoid the following mistakes:
Not Cross-Checking Between Multiple Sources: Relying on information from a single source can be risky. Always cross-check the information you get from third-party directories or state databases with the IRS.
Confusing Revoked Status with Pending Filings: Sometimes, an organization may have its tax-exempt status revoked if it fails to file necessary documents. If the organization is in the process of correcting this, its status may show as pending.
With these steps, you can easily find out if an organization is a nonprofit. For donors or businesses, verifying the nonprofit status can help you ensure your contributions are going where they are supposed to go. For those who want to start a nonprofit, knowing how to check your nonprofit status can help you stay legally compliant. For additional help or advice, consult with an attorney.
FAQ
How do I find out if a nonprofit is credible?
Use third-party directories like Guidestar and Charity Navigator to check the organization’s financial health and transparency.
How do I find out if someone is a nonprofit?
Search the IRS Exempt Organizations Select Check Tool or state-level databases using the organization’s name or EIN.
How to check if a charity is registered in the USA?
Use the IRS tool or state charity regulator databases to confirm the charity's registration status.
How can I find out if a 990 has been filed?
Check the IRS database or third-party directories like Guidestar, which often include filed 990 forms.
