The way that the IRS regulates nonprofit organizations is much in the headlines for all the wrong reasons. These headlines are a reminder that any nonprofit organization — including a private college — must make extensive disclosures to the IRS that are a matter of public record.
A must-have document for anyone doing research on a private university, or the privately incorporated arm of a public university such as a foundation, is the annual IRS Form 990. These tax forms provide a detailed look at what an institution is spending, where its money comes, who’s running it, and much more.
There are now two new resources where requesters can turn when looking for the information that nonprofits share with the IRS.
Earlier this year, the IRS debuted a user-friendly database where highlights from all 990 forms have been extracted into a compressed downloadable file that, when opened, is searchable by field. So far, the database is useful mostly for running comparisons across multiple nonprofits as opposed to pulling data for a single nonprofit.
The nonprofit journalism site, ProPublica, has built its own searchable database, Nonprofit Explorer, that generates a link to the most recent 990 form and a highlight sheet with such statistics as what percentage of revenues the organization spends on compensating its top executives. Besides containing links to and highlights from 2012 filings, Nonprofit Explorer also links to another nonprofit database, Public.Resource.Org, where as many as 10 prior years’ of IRS 990 forms often are retrievable.
The IRS 990 form is indispensable when dealing with a non-public entity because of the limited ability to use public-records requests to get their data. While courts in a few states have said that foundations and athletic associations affiliated with state colleges must honor requests for open records, that view is not unanimous. Among the types of information that the 990 form will yield:
- The compensation package (not just salary but retirement, housing allowances, “deferred compensation” and more) paid to the nonprofit’s highest-paid executives (which generally turn out to be football or basketball coaches).
- The largest contracts that the nonprofit has with outside vendors. At a college, this typically includes food-service vendors, construction companies and law firms.
- The scope of the nonprofit’s overseas operations.
- Disclosure of any adverse financial events that might affect the stability of the nonprofit.
A remarkable number of organizations affiliated with colleges and universities are structured as nonprofit corporations, including teaching hospitals, college accrediting organizations, major athletic conferences, and the NCAA itself. Even the host committees for football bowl games typically are set up as nonprofit corporations, meaning their finances must be at least to some degree transparent.
Besides the new IRS database and the ProPublica database, 990 forms remain available (if the institution chooses to provide them) through Guidestar.org, a free online service that many donors use to do research before investing in a charity. And of course, the forms are supposed to be made available on demand directly from the institution itself.