Two charities working the same problem will not look different on their websites. Both will show photographs, a mission statement, and a number that sounds large. The comparison has to happen somewhere else, in documents both organizations are required to file and neither one designs for persuasion.
The work takes about forty minutes per pair and follows a fixed order: confirm both are real, read the same page of each tax return, check governance, then look at outside assessments.
Step one: confirm the exemption before anything else
Start at the IRS Tax Exempt Organization Search. Search each organization by name or employer identification number. The tool covers Publication 78 data, the automatic revocation list, determination letters, Form 990-N filings, and copies of returns filed since January 2018.
Two results decide whether the rest of the exercise matters. Publication 78 data lists organizations eligible to receive tax-deductible contributions, and the IRS states that users may rely on it for that purpose. The automatic revocation list shows organizations that lost exemption for failing to file for three consecutive years, a consequence written into section 6033(j) of the Internal Revenue Code. The IRS notes that it cannot undo a proper automatic revocation and that no appeal process exists.
Two details are worth knowing. The IRS says donors can deduct contributions made before an organization’s name appears on the revocation list. And some legitimate recipients, including churches and governmental units, may not appear in Publication 78 data at all, so absence is not automatically a red flag.
Step two: read Part IX of both Form 990s
The Form 990 is a public document. The IRS marks it “Open to Public Inspection,” and you can pull returns filed since January 2018 free through the same search tool.
Part IX, the Statement of Functional Expenses, is where comparison actually happens. It splits every expense into four columns: total, program services, management and general, and fundraising. Line 25 gives the totals. Two organizations fighting the same problem, with the same column layout and the same instructions, produce numbers you can put side by side without adjustment.
Part III, the Statement of Program Service Accomplishments, sits earlier in the form and is more useful than most donors expect. An organization must describe its three largest program services by expense and report what each one cost. An organization whose website emphasizes one program while Part III shows the money going somewhere else has told you something.
Part VII lists officers, directors, key employees, and the five highest-paid independent contractors over $100,000. Read it for size and structure rather than outrage. A large organization paying a competitive executive salary is ordinary. A small organization where compensation consumes most of the budget is a finding.
Step three: do not stop at the overhead ratio
The functional expense split invites a single calculation: program expenses divided by total expenses. Use it, then hold it loosely.
In June 2013 the chief executives of GuideStar, Charity Navigator, and the BBB Wise Giving Alliance published an open letter to American donors arguing against overhead ratio as the sole measure of performance. Jacob Harold, Ken Berger, and Art Taylor wrote that overhead covers training, planning, evaluation, and internal systems, and that focusing on it alone starves charities of what they need to do the work. Three organizations whose ratings had popularized the ratio told donors to stop treating it as the answer.
The ratio still detects extremes. An organization spending a third of its budget on programs has a problem the ratio correctly identifies. Between 65 and 85 percent, the number mostly reflects accounting choices about how staff time gets allocated.
Step four: check governance in Part VI
Part VI of the Form 990 asks whether the organization has a written conflict of interest policy, a whistleblower policy, and a document retention policy, and whether the board reviewed the 990 before filing. Part XII asks whether an independent accountant audited the financial statements.
None of these questions measures impact. They measure whether anyone is positioned to catch a problem. An organization answering no across Part VI is not necessarily misusing money, but nobody there is checking.
Every 990 filer must also complete Schedule O, the narrative supplement. Organizations use it to explain unusual entries. Reading it costs a few minutes and occasionally explains a number that looked alarming in the main form.
Step five: read the outside raters, and read their thresholds
Three organizations rate charities on published criteria, and the criteria differ enough that the same charity can score differently at each.
The BBB Wise Giving Alliance evaluates against 20 Standards for Charity Accountability grouped into governance, effectiveness, finances, and solicitations. Standard 8 asks that a charity spend at least 65 percent of total expenses on program activities. Standard 9 asks that it spend no more than 35 percent of related contributions on fundraising. The second standard measures fundraising against contributions rather than total revenue, which is stricter than it first appears. BBB charges charities nothing for evaluation.
CharityWatch grades A+ through F and says plainly that its letter grades rest solely on financial efficiency. It calls a charity highly efficient at a program percentage of 75 or above and a cost to raise $100 of $25 or less. It also downgrades to F any charity holding reserves equal to five years or more of its annual budget, and it generally excludes donated goods and services from its calculations rather than counting them as revenue.
Charity Navigator runs its Encompass Rating System across four beacons: Impact and Measurement, Accountability and Finance, Leadership and Planning, and Culture and Compensation. As of its spring 2026 update it scores at the level of individual metrics, roughly 45 to 50 of them, and treats the beacons as thematic groupings. Star ratings follow published bands, with four stars at 90 and above and one star at 50 to 59. Eligibility requires at least three electronically filed 990s in the past six years, so newer organizations often carry no rating at all. An unrated charity is not a bad charity.
Step six: check the state, and check who is calling you
Most states require charities soliciting their residents to register with a state regulator, usually the attorney general or secretary of state. The National Association of State Charity Officials maintains a directory of those offices. California’s registry publishes filings and correspondence. New York publishes a report called Pennies for Charity showing how much of each donated dollar professional fundraisers kept on campaigns run in that state, which answers a question no national rating covers.
If a paid telemarketer solicited the gift, that report is the most relevant document you will find.
What the comparison usually shows
Two credible organizations working the same issue often differ less in efficiency than in method. One runs direct services. One does research and public education. One organizes volunteers. Fight For A Living Wage, a nonpartisan grassroots 501(c)(3), describes its focus as affordability across housing, healthcare, childcare, food, transport, and education rather than wages alone, and publishes its own survey of organizations working on poverty. Treat any such list, including that one, as a starting set of names from an interested party rather than as a verdict, then run the names through the steps above.
The Form 990 will not tell you which approach works. It tells you whether an organization is solvent, governed, and spending on what it says it spends on. Deciding which method deserves your money is a judgment the filings cannot make for you.