The other day I was catching up with a friend.   She mentioned that she’d been thinking about giving more intentionally as she got older. She wanted to know how to make sure her money was actually going somewhere good, and how to get the most out of the tax benefits while she was at it. (hint: she suggested I research this and write a post…lol)

Such a good question. And honestly? One I hadn’t fully done the homework on myself.

As many of you know, my cause is Breakthrough T1D — my daughter has been living with Type 1 diabetes since she was 19. I didn’t choose that charity through a spreadsheet. I chose it because it has a face and a name in my family. It’s a terrible disease.

But my friend’s question made me realize: not everyone has that anchor. And even I, with nearly thirty years in finance, had never really gone deep on the mechanics of giving well. So I went down the rabbit hole. I investigated. And here’s what I found.

Step 1: Start With Your Own Values

Before you open a single website or look up a single rating, ask yourself one question: what actually matters to me?

Health research? Veterans? Hunger? Education? The environment? Local community organizations? There’s no wrong answer, and you don’t need to defend it to anyone. The point is to narrow your giving to causes that genuinely move you — because those are the charities you’ll pay attention to, follow up on, and stick with over time.

For me, the answer has always been Breakthrough T1D. My daughter’s diagnosis and watching her struggles made that choice for me. I have a good friend whose daughter-in-law was recently diagnosed with LAM (Lymphangioleiomyomatosis — quite a mouthful) — that is her cause. Your reason will be your own.

✨ Practical tip: Write down your top one or two causes before you open any rating site. It focuses your search immediately and keeps you from getting overwhelmed by the thousands of options out there.

Step 2: Run It Through the Watchdog Websites

Once you know what you care about, it’s time to do what any good finance person does before committing money: verify.

There are some free tools I’d recommend using. Think of them as your CFO-level due-diligence kit.

Charity Navigator (charitynavigator.org)

This is your starting point. Charity Navigator rates nonprofits on a 100-point scale across four areas: Leadership & Adaptability, Accountability & Finance, Culture & Community, and Impact & Results. Aim for 3 or 4 stars.

The platform is free to donors, it doesn’t charge charities to be listed, and it also flags organizations that have been reported for fraud or misconduct. That last feature alone is worth the two minutes it takes to check. My Breakthrough T1D was rated 4 stars.

GuideStar by Candid (candid.org)

GuideStar is where you go to get deep information. It hosts IRS Form 990 filings — the annual tax return every nonprofit must file — along with mission statements, financials, and leadership information. Organizations can earn transparency seals from Bronze through Platinum, which reflect how openly they share information about their operations. The more transparent, the better. Breakthrough T1D was Platinum on this site.

CharityWatch (charitywatch.org)

CharityWatch gives letter grades, A+ through F, with a heavy emphasis on how much of every donated dollar actually reaches programs versus going to administration and fundraising. It’s a useful gut-check, especially if the organization you’re looking at isn’t a household name.

I’ll show you how this works in practice: Breakthrough T1D earns an A– from CharityWatch. Their grade reflects slightly higher fundraising costs than some peers — but given what they’re trying to solve, I’m at peace with that tradeoff.

Bonus: BBB Wise Giving Alliance (give.org)

The Better Business Bureau evaluates charities against 20 criteria across governance, effectiveness, finances, and fundraising. Look for the “Accredited Charity” seal. Not every organization pursues accreditation, but the ones that have it have been through a rigorous review. A quick glance here can confirm that your organization follows sound business practices. Breakthrough T1D was accredited.

Step 3: Read the Form 990 Like a Finance Pro

This is the part most donors skip. Please don’t skip it.

The Form 990 is a nonprofit’s annual tax return, filed with the IRS and publicly available through GuideStar on Candid.org. It looks intimidating if you’ve never seen one. But you don’t need to read the whole thing. You need four numbers.

What to Look At	What It Tells You
Revenue Mix	Where is the money coming from? A healthy charity has multiple revenue sources — individual donations, grants, program service revenue — rather than depending on one stream. Breakthrough T1D, for example, draws from grants, contributions, and investment income. Diversification is a sign of stability.
Program Spending Ratio	What percentage of total expenses goes to programs vs. administration and fundraising? A commonly cited benchmark is 75% or more to programs. CharityWatch weights this heavily in its grades. That said, don’t be too rigid — a charity investing in good people and technology may have slightly higher overhead and still deliver exceptional outcomes.
Executive Compensation	Charity Navigator data shows the average nonprofit CEO earns in the low-to-mid six figures. High pay relative to org size isn’t automatic disqualification, but it deserves a look. For context: Breakthrough T1D’s total revenue is $301.7 million. The CEO — a PhD — earns $978,057, which is 0.32% of revenue for a worldwide organization. That feels proportionate to me.
Year-Over-Year Trends	Is revenue growing, stable, or declining? Are reserves healthy? A sudden drop in donations or a pattern of deficit spending can signal trouble — or that something changed in leadership or strategy worth understanding before you commit.

Step 4: Know the Red Flags

Before we get to the warning signs, one more word of caution that most articles miss entirely.

My mom set up automatic monthly donations to several charities — and then, as life does, things shifted. She forgot what she was giving, forgot to deduct it on her taxes, and by the time anyone noticed, years had gone by. It happens more than you’d think.

If you set up recurring giving — monthly or annual — put a reminder on your calendar to review it once a year. Make sure the charity still aligns with your values. Make sure it still fits your budget. And make sure you’re actually capturing those donations come tax time. Automatic doesn’t have to mean invisible.

Now, to the warning signs. Some are subtle. Others are not. Here’s what I’d watch for:

Walk away if you see any of these: The organization refuses to share its Form 990 or financials. You feel pressured to give immediately, on the phone or online. The mission statement is vague and unmeasurable (“improving lives” with no specifics) There is no impact data, no outcome reporting, no third-party audit. Charity Navigator or CharityWatch has posted a concern alert on the profile. The name is suspiciously similar to a well-known charity (a classic scam tactic). The solicitation came unsolicited by phone or email with no prior relationship. You cannot verify 501(c)(3) status on the IRS Tax Exempt Organization Search   That last point is easy to check: apps.irs.gov/app/eos. If a charity can’t be found there, it is not a registered 501(c)(3), and your donation will not be tax-deductible. (Note: apps.irs.gov/app/eos – you do not need the Tax ID number – there is a drop down for the organization name)

Step 5: Protect Yourself From Charity Fraud

I’d be remiss not to mention this. Charity scams are real, and they specifically target older donors, who give more generously and are often more trusting. A few simple precautions go a long way.

• Verify before you give. Use the IRS Tax Exempt Organization Search at apps.irs.gov/app/eos to confirm 501(c)(3) status. It takes about thirty seconds.
• Check for alerts. Charity Navigator maintains a list of organizations with known concerns or fraudulent activity. Search the name before writing a check.
• Watch for lookalike names. Scammers deliberately choose names that sound like established charities. “American Cancer Society” is legitimate. “American Cancer Fund” is not the same organization.
• Never give to unsolicited calls. Legitimate charities do not pressure you on the phone. If someone calls asking for a donation, ask them to send information in writing, then look the organization up yourself.

The Bottom Line

Giving is one of the genuinely wonderful things about this season of life. We have more perspective than we used to, more resources in many cases, and a clearer sense of what actually matters.

But generosity and thoughtfulness aren’t opposites. Vetting a charity doesn’t make your giving less heartfelt. It makes it more powerful. It means more of your money reaches the people who need it, and less of it disappears into overhead, administration, or worse.

My daughter’s health is why I give to Breakthrough T1D. Your reason will be your own. But the homework is the same for all of us — and now you know how to do it.

As always, I’m not a financial advisor and this isn’t tax advice. For your specific situation, please consult a CFP or CPA.

Frequently Asked Questions

What is the best way to vet a charity before donating?

Start with Charity Navigator, GuideStar, and CharityWatch — three free tools that evaluate nonprofits on financial health, transparency, and impact. Look for at least a 3-star Charity Navigator rating, verify 501(c)(3) status on the IRS website, and review the Form 990 for program spending ratios and revenue stability. A legitimate charity will always be willing to share this information.

What is the Form 990 and why does it matter?

The Form 990 is the annual tax return every nonprofit must file with the IRS, and it’s publicly available through GuideStar. Even a quick review of four data points — revenue mix, program spending ratio, executive compensation, and year-over-year trends — can tell you a great deal about whether an organization is financially healthy and transparent.

How do I know if a charity is a scam?

Verify 501(c)(3) status on the IRS Tax Exempt Organization Search at apps.irs.gov. Check Charity Navigator for any fraud or misconduct alerts. Watch for names that closely mimic well-known organizations. Never give to unsolicited phone calls, and never let anyone pressure you to donate on the spot. If something feels off, walk away and look it up independently.

What percentage of a charity’s expenses should go to programs?

A commonly cited benchmark is 75% or more of total expenses going directly to programs rather than administration and fundraising. CharityWatch uses this ratio as a primary factor in its letter grades. That said, overhead percentage alone doesn’t tell the whole story — look at it alongside impact data and outcome reporting.

What’s the difference between Charity Navigator, GuideStar, and CharityWatch?

Charity Navigator gives star ratings based on leadership, finances, culture, and impact — it’s your best starting point. GuideStar hosts Form 990 filings and transparency seals, so you can look under the hood at raw financials. CharityWatch issues letter grades with a heavy emphasis on how efficiently each dollar reaches programs. Using all three together gives you a well-rounded picture.