Nonprofit Status Bias

You’ll often find claims that dot-org is equivalent to nonprofit status. Let’s take a moment to clear that up. It’s wrong. Some dot-orgs have nonprofit status. Some don’t. While we’re at it, let’s clear up another issue. By itself, nonprofit status is not proof that a group can be trusted.

To be designated as a nonprofit organization in the United States, a group must file paperwork with the IRS. If approved, it earns the official IRS designation as a 501(c)(3) “tax deductible” organization. When many people see 501(c)(3) status on a website, they automatically assume they’re in good hands. Bad move.

With cutbacks at the IRS and the mountain of nonprofit applications it needs to process, obtaining 501(c)(3) status is just a tad more difficult than renewing your driver’s license. In 2015 alone, the IRS reviewed 101,962 applications, nearly double the number of applications it processed in 1998. Of these, 94 percent, or 95,372, were approved. Odds we would love at Las Vegas slot machines. Hundreds of trade associations and shadowy lobby groups carry the nonprofit designation. A report by the Stanford Center on Philanthropy and Civil Society found that, in a single year, groups like the International Society of Talking Clock Collectors, which “appears to be the private collection” of a single collector held in his home; the Metempyrion Foundation, where “people with intuitive and telepathic potential will be given an opportunity to enhance their skills”; and Planet Jelly Donut, whose goal is to spread “the common belief that the core essence of the human spirit is goodness,” all received approval. It’s no exaggeration, the report concluded, that when it comes to obtaining nonprofit status, “nearly anything goes.”