Is Your Charity Still Charitable? Here’s How to Find Out

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Credit counseling agencies and charitable organizations gain consumer credibility by being registered as a non-profit. But the IRS can revoke that status. Here's a list of recent examples.

If you work with a credit counseling agency, one of the reasons you selected them might be their nonprofit, tax-exempt status. And that’s good logic: In order to qualify as a charitable organization – often called a 501(c)(3), named after the section of the tax code that enables them – organizations have to be, well, charitable. Here’s how the IRS qualifies an organization as tax-exempt.

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual.

In short, in order to qualify as a tax-exempt charitable organization, the organization must act in the best interests of the public, as opposed to the people running it. And if the IRS determines that’s not the case, they revoke its 501(c)(3) status and make it pay taxes like the rest of us.

The IRS keeps an eye on 501(c)(3) organizations and periodically publishes a list of those that are losing their tax-exempt status. If you’re donating to one, you certainly want to know if an organization is losing their charitable designation, because that means any donations you make will no longer be eligible for a tax deduction. And if you’re working with one – like a credit counseling organization – losing tax-exempt status is a definite red flag and something you’d want explained.

Here’s a list of organizations that have recently had their tax-exempt status revoked, from this page at the IRS website. Notice how many are credit counseling organizations.

Ameri-Home Foundation, Inc. Lenexa, KS 9/13/10
American Children’s Safety Source Michigan Center, MI 11/1/10
American Family Credit Counseling Peoria, AZ 9/20/10
Anna Foundation, Inc. Melville, NY 11/1/10
Apple Consumer Credit Counseling, Inc. Lynebrook, NY 9/20/10
Brotherhood of Men, Inc. Washington, DC 9/20/10
Buyer’s Fund, Inc., The Salt Lake City, UT 9/13/10
California Consumer Credit Los Angeles, CA 11/1/10
Consumer Counseling Centers of America Washington, DC 11/1/10
Credit Counseling Bureau of San Diego County (Litigation pending) San Diego, CA 9/13/10
Cruffel Foundation, The Jackson, WY 11/1/10
DPA Alliance Corporation (Litigation pending) Provo, UT 10/4/10
Debterminded Inc. Coral Gables, FL 9/20/10
Debticated Consumer Counseling, Inc. Centerport, NY 11/1/10
Exegetical Institute, Inc. (Litigation pending) Kingsland, GA 9/13/10
Family Home Foundation, Inc. Orem, UT 9/13/10
Five Star Debt Management Services, Inc. Melville, NY 9/20/10
Fleetwood Stage Company, Inc. New York, NY 9/20/10
Gold Coast Credit Counseling, Inc. Lake Worth, FL 9/20/10
Harbour Credit Counseling Services, Inc. (Litigation pending) Virginia Beach, VA 10/4/10
Home Downpayment Gift Foundation, Inc. Washington, DC 9/13/10
Interpreter Referral Service dba Chicago Area Interpreter Referral Service Chicago, IL 11/1/10
Jeffrey Reiken Johnson Clergy Public Ministry Association, Inc. A Church, The San Francisco, CA 11/8/10
Life Time Transition, Inc. Robbinsdale, MN 11/8/10
Lighthouse Foundation, Inc. Newman, GA 9/20/10
Minnesota StandDown, Inc. Minneapolis, MN 11/8/10
Museum of Military History Chandler, AZ 11/1/10
Nat Turner Legal Defense Fund (Litigation pending) Garland, TX 10/4/10
Ohio Narcotic Officers Association Warren, OH 11/8/10
Owls Next 1424, Inc. St. Mary’s, WV 11/8/10
Opera Institute of California Palm Springs, CA 9/20/10
Project Challenge of the West Coast, Inc. Bradenton, FL 9/20/10
Promise Consumer Credit Services, Inc. Coconut Creek, FL 9/20/10
Strides, Inc. Watertown, SD 9/20/10
Task of Rome GA, Inc. Rome, GA 11/8/10
Town and Country Acceptance Corporation Cantonment, FL 9/20/10
Unicorn Development Corporation Saint Joseph, MI 9/13/10
United Children’s Fund Michigan Center, MI 11/1/10
Vang Pao Foundation St. Paul, MN 9/20/10
Walker Foundation Cincinnati, OH 9/20/10
Winterhaven, Inc. Norwalk, IA 9/20/10
Xelan Foundation, Inc. (Litigation pending) Tampa, FL 9/13/10
Yonkers Alliance for Latino and Immigrant Services, Inc. Yonkers, NY 8/23/10

If you’re working with any organization on this list as a donor, or in the case of a credit counseling organization, a client, you should be concerned. Call the organization and see what caused the IRS action.

The list above includes only recent revocations. There have been literally hundreds of organizations that have lost their tax-exempt status over the last few years. Here’s a cumulative list of revocations from January 2005 to now.

Table of Links:

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Do a quick check of your favorite charity and make sure it remains your favorite charity.

Stacy Johnson

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