📅 2026 Update: Changes in Charity Ratings and Business Formation

Since the article was originally written, there have been significant updates in the landscape of business formation and charity ratings. Most notably, changes under the Corporate Transparency Act affect reporting requirements for businesses. The earlier article continues further down the page, providing foundational knowledge about how charities are rated and how to determine their legitimacy.

📝 New Reporting Rules

The Corporate Transparency Act saw a major change on March 26, 2025. The Financial Crimes Enforcement Network (FinCEN) issued a rule exempting most U.S.-formed companies from beneficial ownership reporting. Now, only foreign-formed entities must file these reports.

This affects how businesses, including charities, manage their compliance responsibilities.

💰 Updated Costs for Formation

State filing fees for forming a charity or business range from about $50 to $300. This varies by state and sometimes depends on the number of shares authorized. For example, some states offer expedited processing for an additional fee, allowing businesses to file their articles faster.

⏳ Processing Times

The standard processing times for business formation filings can take from a few business days to several weeks. Many states provide expedited processing options, with turnaround times ranging from same-day to 1-3 business days. This is crucial for charities that need to establish themselves quickly.

🛠️ Free Resources Available

Charities and new businesses can access free resources from organizations like the Small Business Administration (SBA) and SCORE. These organizations offer guidance on starting and managing a charity, including compliance with state and federal regulations.

📌 Key Points Summary

  • 🗓️ New reporting rules exempt U.S. companies from ownership reporting.
  • 💵 Formation fees range from $50 to $300.
  • ⏳ Processing times vary from days to weeks, with expedited options.
  • 🆓 Free resources are available from the SBA and SCORE.

💡 Tips for Evaluating Charities

Consider reviewing the details of your situation with an attorney. This ensures you understand the requirements and implications of your charitable endeavors.

🔍 Research Charity Ratings

Look for reputable sources that rate charities. Organizations like Charity Navigator and GuideStar provide insights into a charity's financial health and accountability.

📜 Check Registration Status

Verify that the charity is registered with the appropriate state agency. This confirms that the charity complies with local laws and regulations.

💬 Read Reviews and Feedback

Investigate reviews on platforms like Trustpilot. User experiences can highlight concerns or strengths of a charity's operations.

🔄 Understand Their Mission

Make sure the charity's mission aligns with your values. Review their goals and the impact they claim to make in the community.

💡 Request Financial Information

Ask charities for their financial documents, such as the IRS Form 990. This document provides transparency about their financial activities and funding sources.

⚖️ Evaluate Accountability

Look for information on how the charity manages its funds and programs. Accountability measures can include regular audits and public disclosures.

🏆 Charity Services Ranked by User Reviews (2026)

This section highlights services that assist with charity formation and compliance, based on user reviews from Trustpilot as of October 2026. These services fit well with the topic as they aid in establishing legitimate charities. Trustpilot scores can change over time, and while star ratings are informative, they may not capture every customer's experience.

🥇 1. Bizee

Bizee has been rated **4.8. It is known for its LLC formation services, registered agent services, and compliance services. Reviewers appreciate its efficiency in helping charities get established.

However, some note that Bizee has limited availability of legal advice, which may be a drawback for those needing legal guidance.

🥈 2. Inc Authority

Inc Authority holds a **4.8 rating. It is recognized for its no-cost Secretary of State registration and business credit services. Users find it helpful in navigating the charity formation process.

Some reviews mention the potential for upselling additional services, so users should be aware of this when using their offerings.

🥉 3. LegalZoom

LegalZoom has an average score of **4.6. It is known for its business formation and registered agent services. Many users appreciate the comprehensive range of services available for charities.

However, some have reported delays in processing times and occasional challenges with customer support responsiveness.

🆓 Free Government or Nonprofit Assistance

Free resources from organizations like the SBA and SCORE are available for charities. The SBA provides guidance on starting and managing a business, while SCORE offers free mentoring and workshops. These resources can help guide new charities through the formation and compliance processes.

🔎 What to Compare When Choosing Services

  • 🏷️ Pricing structures and fees for formation services.
  • ⏰ Processing times for filing documents.
  • 📞 Availability of customer support and legal advice.
  • 🏢 Reputation based on user reviews and ratings.

❓ Frequently Asked Questions

❓ How do I know if a charity is legitimate?

Research the charity's registration status with state agencies and check their ratings on platforms like Charity Navigator.

📋 What should I look for in a charity's financial reports?

Review their IRS Form 990 for transparency on income, expenses, and how funds are allocated.

🔍 How can I find out about a charity's impact?

Look for reviews and testimonials from beneficiaries or community members to understand the charity's actual impact.

📞 What if I have concerns about a charity's operations?

You can report concerns to state regulatory agencies that oversee charities and nonprofit organizations.

🏦 Are there fees for forming a charity?

Yes, state filing fees typically range from $50 to $300, depending on the state and other factors.

⏳ How long does it take to form a charity?

Formation times can range from a few business days to several weeks, depending on state processing times and whether expedited services are used.

⚖️ Recent Cases Related to Charities

Recent court rulings reflect ongoing issues in charity regulation and compliance. Such cases often relate to the accountability of charities and their financial practices.

Explore more recent rulings in the news section for additional insights more rulings on the news page.

End of October 2026 Update






 



 



Introduction:

How are Charities Rated?/How Do I Know A Charity is Legitimate?


 



 



Giving to unknown or unpopular charities may be a risky proposition if that organization is unclear or vague about operating costs and the financial feasibility of is organization. Several resources exist to help guide your giving decision.  Use these resources as a guide to determine if your giving decision is a wise one.



 



 



The American Institute of Philanthropy (charitywatch.org):



 



 



The AIP maintains rankings ranging from A+ - F with top rated charities generally ranging from B+ to A+.  This organization is funded by donations from the general public so membership that provides will cost you $40 and a sample copy of their charity rating guide will cost $3.   AIP justifies this practice as it keeps its rating impartial and not subject to pay-for-ranking schemes.  The rankings for top rated charities are available for no cost on their website – charitywatch.org



 



 



What are the rating criteria?



 



 



AIP generally focuses on charities that receive a million dollars of public support annually and are of interest to its members.  It does not respond to request from organizations to be ranked and does not rank private religious, social and cultural organizations.



AIP checks the charities financial records against state and federal government filings through an independent review. It prides itself on being an independent watchdog as charities have little incentive to “criticize” themselves.



 



 



Key criteria are as follows:



 



 





  • Percentage spent on charitable purpose – most efficient charities will spend 75% or more on programs.  Exceptions are made for organizations that do not receive tax deductable contributions


  • Cost to raise $100 – AIP considers $35 or less to raise $100 reasonable for most charities


  • Years of available assets - how long the charity can afford to operate without additional fundraising.   AIP considers assets lasting three years or less reasonable.  Charities with large amounts of assets receive lower grades as they do not have a pressing need for more donations.






  •  


  • AIP does not rank local organizations or national organizations comprised of local affiliates, only charities that have a national focus.




 



 



Charity Navigator (charitynavigator.org): 



 



 



Charity Navigator is a non-profit organization that serves as a guide to intelligent giving that has rated 5,000 charities and provides information to the public free of charge.



 



 



Charity Navigator does not evaluate 501(c)4 organizations as most of their donations are not tax deductable.  Other organizations that do not have to fill out tax Form 990 are not rated, due to a lack of information about the finances of the organization.  This organization also does not evaluate private foundations as these organizations do not rely on funding from the general public.



 



 



What does Charity Navigator require for evaluation?



 



 



A charity must have:



 



 





  • Public support of more than $500,00 and total revenue more than $1,000,000


  • 4 years of Form 990 filings


  • Operations based in the US and registered with the IRS, although the scope of the organization can be international.


  • Fundraising expenses




 



 



What are the rating criteria?



 



 



Charity Navigator analyzes organizational efficiency and capacity.  Some criteria categories include program administrative and fundraising expenses, revenue and program expenses growth and working capital ratio.  There are various adjustments for deficits, indirect cost allocation and programs that spend less than a third of its budget on program expenses.



 



 



Better Business Bureau – (bbb.org/us/charity)



 



 



The Better Business Bureau maintains a dedicated website to collecting complaints about charities and authorizes seals to verify that charities have been vetted by the organization.