How to Vet a Charity Before a Major Gift

A major gift is a transfer of your property to an organization you do not control, often on terms that will outlast your attention and quite possibly you. The warmth of your relationship with the development office is real, but it is not a term of the gift. What protects your intention is what you verify before you commit and what you put in writing when you do.

After reading, you should be able to confirm the organization is the entity it claims to be, read its Form 990 for the answers that matter, find the state regulator’s file, decide how much control to keep, and know which clauses and tax records to require.

Confirm the entity, its number and its status

Begin with the Employer Identification Number, not the name. The IRS Tax Exempt Organization Search shows whether an organization appears in Pub. 78 data (the list of organizations that can receive tax-deductible contributions), whether it is on the automatic revocation list, its determination letters dated January 1, 2014 or later, and its recent Form 990-series filings. Exempt status is revoked automatically when an organization fails to file its required annual return or notice for three consecutive years, so an old determination letter proves little on its own.

Pub. 78 data carries only the official name, not a trading name, and some eligible recipients, including churches and governmental units, may not be listed. A university or museum may take gifts through a separate foundation with its own EIN. Establish which entity will hold and spend your gift, and put its legal name and EIN in every document; our guide to charitable bequests explains why that precision matters.

Read the Form 990 for money and mission

A charity that files Form 990 must make it publicly available for three years from its due date, including extensions, or from its actual filing date if later, though it need not publish contributors’ names and addresses. Read the three most recent returns side by side; a trend says more than a year.

Part III states the mission and describes the three largest program services by expense, with each one’s expenses, grants and revenue for a 501(c)(3). Compare that narrative with Part IX, which divides every expense among program services, management and general, and fundraising. There is no correct ratio, and a thinly staffed charity is not automatically a virtuous one. Look for consistency: programs that sound substantial should look substantial in the numbers.

The balance sheet separates net assets with and without donor restrictions and shows pledges receivable net of amounts the charity does not expect to collect. Part IV asks whether the organization obtained independent audited financial statements; the instructions state that a compilation or review is not an audit.

Read it again for pay, insiders and governance

Under the 2025 Form 990 instructions, Part VII lists every current officer, director and trustee regardless of pay, key employees with reportable compensation over $150,000, and the five highest-paid other employees over $100,000. Part VI, line 15 asks whether the chief executive’s pay was set through review by people without a conflict, comparability data and contemporaneous documentation. A “No” is not proof of excess, but it is a question for the board chair.

Dealings with insiders surface in Part IV, lines 25 to 28, and on Schedule L: excess benefit transactions, loans and other receivables or payables with interested persons, and business transactions with leaders, their families or their companies.

The rest of Part VI is a governance review in yes-or-no form: how many voting board members are independent (line 1b); whether the organization learned of a significant diversion of assets, including embezzlement or theft (line 5); whether the board received a complete copy of the return before filing (line 11a); and whether it had a written conflict of interest policy, a whistleblower policy and a document retention policy (lines 12 to 14). The IRS says these policies generally are not required by the tax code but considers them to improve compliance. A string of “No” answers is a reason to slow down.

Generosity sets the amount of a gift; diligence decides whether it does what you meant.

Check the state file as well as the federal one

The IRS decides tax exemption; states, usually through the attorney general, oversee how charitable assets are raised and used, under rules that vary. Form 990, Part VI, line 17 lists the states where the organization must file its return.

New York shows what a state file can hold. Covered charities operating there must register and file annual financial reports with the Attorney General, but the state exempts categories including many religious, governmental, membership, parent-teacher and education organizations. The public registry shows status and reviewed financial reports filed in the last five years; the Attorney General also publishes records and tools for certain transactions and professional fundraising campaigns. Confirm whether an apparent gap reflects an exemption, a filing lag or noncompliance before drawing a conclusion.

Restricted or unrestricted: choose your level of control

An unrestricted gift gives the board full use of your money. A restricted gift attaches conditions of time, purpose or both, or requires that the assets be invested to produce permanent income. Under the Uniform Prudent Management of Institutional Funds Act, which states have widely enacted in their own versions, an endowment fund is one not wholly expendable on a current basis under the gift instrument; money the board designates as an endowment for its own use is not one.

Restriction buys control at the price of flexibility. Write the purpose narrowly enough to mean something and broadly enough to survive change. Keep the proposal letter: the act’s definition of a gift instrument includes an institutional solicitation.

What the gift agreement should settle

Have your own counsel review the charity’s template for:

1. The recipient by legal name, EIN and state of organization.
2. The property, its value and the payment schedule.
3. The purpose, any restriction, and whether the gift is endowed or spendable.
4. Naming: what is named, for how long, what happens on renovation, demolition or merger, and when the name may be removed.
5. Reporting: what written account you receive each year, and for how long.
6. Anonymity: where your name may appear, and whether anonymity survives your death.
7. Any benefits you receive, which reduce the deductible amount.
8. What happens if the purpose fails.
9. Governing law, and who may speak for your intent once you cannot.

When the purpose fails

Programs close and institutions merge. Under the uniform act, a charity may release or modify a restriction with the donor’s consent in a record, but never so as to use the fund outside its charitable purposes. Without consent, a court may modify a purpose that has become unlawful, impracticable, impossible to achieve or wasteful, consistently with the gift instrument, with notice to the attorney general. For small, old funds whose restriction has failed in one of those ways, the institution may act alone after notifying the attorney general, within limits each state sets; the model text brackets $25,000, 20 years and 60 days. New York’s version, for example, uses $100,000, 20 years and 90 days, and generally requires notice to the donor, if available.

Name an alternate purpose now, require consultation while you are living, and ask counsel how your state treats consent after your death.

Pledges and the paperwork the IRS requires

A charity reports pledges as receivables and may budget around yours. Whether a pledge binds you, and later your estate, depends on state law and its wording, so say which you intend. If binding, state what happens on death or incapacity and to naming rights if payments stop, and coordinate it with your will and your structured giving plan.

No deduction is allowed for a single contribution of $250 or more without a contemporaneous written acknowledgment, and obtaining it is your responsibility. It must name the charity, state the cash amount or describe (not value) the property, and address any goods or services provided, and you must have it by the earlier of your filing date or the return’s due date with extensions. For a payment over $75 that is partly for goods or services, the charity must also give you a written disclosure statement.

Noncash gifts add Form 8283 when the deduction exceeds $500. Above $5,000 per item or group of similar items, other than publicly traded securities and specified exceptions, you generally need a qualified appraisal. The qualified appraiser must sign and date it no earlier than 60 days before the contribution, and you must obtain it by the return’s due date, including extensions; a fee based on a percentage of appraised value is generally prohibited. Attach the signed appraisal when the deduction for art is $20,000 or more and, subject to listed exceptions, when the property deduction exceeds $500,000. The donee generally signs Part V of Section B, but that acknowledgment does not represent agreement with your claimed value. If tangible personal property is expected to be used for an unrelated purpose, your deduction can be limited. A donee that disposes of charitable-deduction property within three years generally files Form 8282 and sends you a copy, with exceptions including qualifying items valued at $500 or less and items consumed or distributed without consideration for charitable purposes. What the deduction is worth is a separate question: see the 2026 deduction rules.

Questions to ask before you sign

1. What is the recipient’s exact legal name and EIN, and is it in Pub. 78 data?
2. May I have the last three Forms 990 and the latest audit?
3. How was the chief executive’s pay set, and who approved it?
4. Are there Schedule L transactions or a reported diversion of assets?
5. Is the charity current with each state regulator where it must file?
6. If my restricted purpose fails, who decides what happens?
7. How long does the name last, and when can it be removed?
8. What will you report to me each year?
9. For property: will you sign Form 8283 and keep the item, and who is the appraiser?

This article provides general U.S. educational information and is not legal, tax, accounting, or appraisal advice. Confirm current rules with the IRS, your state attorney general, and qualified counsel who knows your facts before you sign a gift agreement.