Liberating 990 Data

How do I know I'm a philanthropy wonk? The title of this post thrills me, that's how I know.

I'm crossposting what follows from Beth Noveck, co-author of the Aspen Institute paper on Liberating 990 data. I'm tuning in to the live stream, making sense of my scribbles which I marked all over the paper and will be back here soon with my thoughts on this.


From Beth Noveck

Every year in the United States approximately 1.5 million registered tax-exempt organizations file a version of the “Form 990” with the IRS and state tax authorities. While the questions vary between the version for private foundations or small nonprofits, the 990 collects details on the financial, governance and organizational structure of America’s universities, hospitals, foundations, and charities to the end of ensuring that they are deserving of tax exempt status. These organizations, which together pay $670 billion in wages and benefits annually, create America’s education, culture, art, religion, science, and provide many of the social services upon which our communities depend.

With a national movement in the U.S. to shrink the role of government, non-profits may be expected to expand their programs as they step in to fill essential needs. The role of nonprofits may now become even greater – and deserving of greater scrutiny. 
The data that the IRS collects about nonprofit organizations present a great opportunity to learn about the sector and make it more effective. Yet this data could be made far more useful than it is today. It’s time to “liberate” 990 data and make it easier to gain insight into the workings of America’s nonprofits.

The IRS does make nonprofits’ Form 990 returns available, but only on DVDs for a high fee. A single year’s worth of 990s costs over $2,500, arguably to recoup the costs of pressing and mailing all these dics. But there is no reason to charge for the Form 990 data at all. Just as most people have gotten accustomed to sharing large files via a service like Drop Box, it would be simple for the IRS to publish the returns online for anyone to download in bulk for free. This week two groups committed to government transparency, Public Resource and the Internet Archive, used their own resources to post 12 years of returns online, demonstrating that it can be done.

As President Obama declared on his first day in office, “Information maintained by the Federal government is a national asset,” and IRS data on nonprofits is important and valuable information that should be available to everyone.

The DVDs are only part of the problem. Even if you can afford to buy the DVDs with Form 990 data, as some organizations and news media do, the data on them is contained in image files, which are created by scanning the printed Form 990s rather than putting their data into a searchable database. Image files are useful only for reading about one nonprofit organization at a time. The sector deserves comprehensive and computable data that can be openly aggregated, searched, checked, and analyzed. 
In the long run, as a condition of being a nonprofit, organizations should be required to file the Form 990 electronically, rather than on paper, and the IRS should publish those returns in formats that lend themselves to doing aggregate analytics, creating visualizations and building analytic tools.

The IRS can start releasing in a timely fashion the data it holds that is filed electronically in computable form without waiting until all returns are electronically filed. There’s some debate about how much authority the IRS has to make changes like this on its own, and whether they would require Congressional action. Others argue that under the Freedom of Information Act, they must release the data. But we don’t need to wait for either a legal battle or for the IRS or Congress: The groups that now independently analyze IRS data can and should take the lead.