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Form 990

IRS Forms 990 as a Research Tool Mark Hager Center on Nonprofits and Philanthropy The Urban Institute. Form 990. Charities with federal charitable exemption must file annually. In 1980s, states began to adopt Form 990 as their required form as well.

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Form 990

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  1. IRS Forms 990 as a Research ToolMark HagerCenter on Nonprofits and PhilanthropyThe Urban Institute

  2. Form 990 • Charities with federal charitable exemption must file annually. • In 1980s, states began to adopt Form 990 as their required form as well. • Public document. Widespread disclosure and legitimacy of form has spurred filing. • More than 200,000 public charities filed Form 990 or Form 990EZ in 2000. • Increasingly used by researchers to document and understand nonprofit organizations and sector.

  3. Not all organizations file • Delinquency. Some organizations fail to file, or file very late. • Small size. No registration if < $5,000 in gross receipts. Not required to file if annual gross receipts < $25,000. • Religious focus. Congregations not required to file. • Entities embedded in larger organizations, or Chapters. • Unincorporated, or sole proprietorships. If all revenues are earned, organizations are not motivated to seek charitable exemption. • Quasi-governmental. Community action agency or mental health clinic, etc., that function as govt agencies.

  4. Research using Form 990 • Studies of scope and dimensions of nonprofit sector, including local inventories. • Subsector analyses. • Spatial analyses. • Benchmarking of financial variables. • Analyses of program services and activities. • Sampling frames for primary data collection.

  5. Overhead Costs Study • Sampling Frame: NCCS Core file of circa 2000 Form 990 filers. • Exclusions: - Gross receipts < $100,000 - Mutual benefit, pension/retirement funds, real estate orgs, named trusts

  6. Data Collection • 5000 organizations drawn • 3782 attempted pre-calls • 3114 successful pre-calls • 3069 surveys FedEx’d • 1540 surveys returned after four months and multiple prompts • 1540 / 3069 = 50.2%

  7. Widespread Questions about Financial Reporting Factoid: Of nonprofit organizations that report at least $5 million in annual contributions, about 1 in 4 report no fundraising costs. Factoid: Of nonprofit organizations that report at least $10 million in annual expenses, about 1 in 25 report no administrative costs.

  8. Research Question How consistent is reporting between IRS Form 990 and an independent survey of nonprofit financials?

  9. Contributions – 53% inconsistency

  10. Government Grants – 32% inconsistency

  11. Special Events – 39% inconsistency

  12. Professional Fundraisers – 10% inconsistency

  13. Joint Cost Allocations – 14% inconsistency

  14. DV: Consistency Across 5 Measures

  15. Functions of Respondents • Development Staff (n=196): - Fundraising director, other fundraising staff • Executive Staff (n=819): - Executive or chief operating officer, president, administrative staff • Accounting Staff (n=160): - Financial officer, accounting director, accounting staff, bookkeeper, tax professional

  16. Do we expect function to matter in consistency of reporting?

  17. Bivariate relationships between function and reporting consistency

  18. Conclusions • Form 990 is a valuable source of data on nonprofit organizations. • Poor reporting on key financials is a big challenge to that value. • Inaccurate reporting has implications for management of individual organizations, public policy research, and giving decisions.

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