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Are Nonprofits Aware of New Disclosure Requirements?

By Putnam Barber, June 1999

On June 8, 1999, new U.S. Internal Revenue Service requirements for disclosure of nonprofit tax returns went into effect. Over the past week, in order to test nonprofit awareness of these requirements, volunteers in 12 states requested copies of recent IRS Form 990s from nonprofit organizations. This report was prepared from their email reports of what happened.

73 completed reports were received by Sunday, June 13. 37% of the agencies contacted (27) responded immediately with access to a current 990.

The clear winners were in San Francisco and New York City. In the city by the bay, one agency already had copies of their most recent three 990s in folders at the reception desk, waiting for anyone to ask. In the big apple, an arts organization appeared to hesitate, then delivered the requested 990 by messenger before the end of the day!

The clear loser is voice mail, which simply appears not to work for handling requests of this sort. 31% of the requests got responses that fit the category "Obfuscation -- referral to another office, etc." Most of these involved receptionists sending the caller to voice mail for "the person who handles that sort of thing," who then failed to return the call -- or send the 990 -- by the time the survey report was filed.

No type of organization stands out as particularly resistant or particularly forthcoming. It's encouraging that two-thirds of the organizations classified as "Philanthropy and Voluntarism" provided the requested information immediately, though there were only six of these contacted. And it's discouraging that half the "Arts" organizations fell into the "Obfuscation" grouping, but again the fact that there were only 10 reports from arts organizations forbids reading too much into the ratio.

56% of the 9 California organizations contacted honored the request immediately, and 57% of the 14 DC groups did. My own state of Washington did pretty well, with just under a third of 13 charities responding immediately. None of the eleven groups contacted in Ohio and Indiana were willing to provide the requested information immediately.

The survey included mostly coastal states, and the only Southern states where any requests were made were South Carolina and Virginia, where four of eight responded immediately.

The narrative reports suggest that only a small proportion of the agencies contacted based their response on awareness of the new regulations. Most seemed to be following an established process, or simply to have little or no idea how to respond to requests for federal information returns. My sense of it is that the concerns that led Congress to enact the new disclosure requirements in the 1996 "Taxpayer Bill of Rights" are still pretty valid. The nonprofit sector is going to have to work to bring its performance in this sensitive area up to a level that meets the standard expected -- indeed required -- of us.

20 people who had requested 990s from nonprofits in 12 states reported the results of their requests by Sunday, June 13. New regulations expanding the public's rights of access to these documents took effect on June 8. The requests were made by people who respond to requests for volunteers posted in the cyber-accountability and NPTalk online discussion groups. The study was conceived and organized by Putnam Barber in Seattle, Washington.

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