990s in 1999

Most of us are thinking about our personal income tax returns now. The time for 990s will be later in the year (the 15th of May for organizations with fiscal years that end December 31).

This year, though, would be a good time to give a little extra attention to 990s. The forms filed this year will be the most frequently requested under the new regulations that will require them to be delivered directly to anyone who inquires. They are the ones that will be scrutinized for troubling signs that might provoke an "intermediate sanctions" investigation. And data from 1999 990s will be posted on the web much more frequently -- sometimes by organizations taking the extra step to provide information to the public, sometimes by others who believe strongly enough in wider availability of such details that they take direct action to make it happen. (There's more information about all these issues in the "IRS" section of the NONPROFIT FAQ at http://www.nonprofits.org/npofaq/.)

No graphics designer is ever going to be happy with the way a 990 looks! But that's no reason to allow it to contain inadequate, or worse misleading, information. Plus too many organizations have filed 990s in the past that were just plain sloppy, with mistakes that can be identified from blank spaces where answers should be or just by doing simple arithmetic using the numbers on the page.

Chip Watkins provided the cyber-accountability mailing list with this summary: According to information from the IRS Ogden Service Center, the most common errors in filing Form 990 are:

• Failing to file a complete Schedule A (36% of returns filed)
• Failure to sign the return (16.5%)
• Failure to complete Schedule A Support Schedule (15.5%)
• Incorrect tax year at the top of page 1 (10%)
• Failure to complete balance sheets for both years and required schedules(6%)

It's probably hard to convince a potential donor of the care you will take to use the contribution well after such an error catches her or his attention.

Senior executive staff and leadership volunteers should review the 990 carefully, making sure every possibility for error has been double checked. Even more important, they should look to make sure that their 990 documents effectively the public benefits the organization provides and the services it delivers. The spaces are small. Use attachments. The language in the form itself is unfamiliar. Help the reader with explanations in the answers you provide.

Canadian Accountability

In Canada, issues of this sort have been under scrutiny for some time. Susan Phillips, the Project Director for the Panel on Accountability and Governance in the Voluntary Sector (who is also an Associate Professor in the School of Public Administration at Carleton University in Ottawa, Ontario), summarized the project in the ARNOVA discussion group. "The idea," she wrote on February 9, "is to leave Revenue Canada to a more narrow auditing role and create a quasi-independent Commission, attached to the federal government and thus the Income Tax Act, that would: make recommendations on applications for charitable status; provide information to the sector and the public; investigate public complaints and help organizations with compliance of the rules enforced by Revenue Canada. The premise is that most non-compliance is a result of lack of capacity by small organizations; they do not ask Revenue Canada for help as they are afraid of being audited. Thus the idea is to work in partnership with the sector to develop more accountability tools and to share these across the sector as well as to increase public transparency. The model was based on the Charity Commission of England and Wales, but recognizing the realities of Canadian federalism. Throughout the process, the Panel consulted extensively with Revenue Canada and they are actually quite favourably disposed to the idea.

"The process is an interesting example of the sector taking the initiative for itself as the Panel (all volunteers) was created and funded by the sector. The report of the panel is available online." See www.pagvs.com/ (NOTE 5/1/01: This website is no longer operating and a search for the organization turned up no current source of information.)

Improvements to the Nonprofit Locator

(NOTE 5/1/01: The Internet Nonprofit Center no longer operates the Nonprofit Locator; good listings of nonprofits in the United States can be found by visiting http://www.guidestar.org/ or http://www.idealist.org. The IRS also provides a way of searching for recognized nonprofits at its website; see http://www.irs.ustreas.gov/prod/bus_info/eo/eosearch.html. It is often possible to find information about a specific nonprofit quickly by entering its name and the city where it operates in the search window at http://www.google.com. We regret that the Locator is no longer available.)

We have recently completed an upgrade in the underlying technology that supports the Nonprofit Locator (www.nonprofits.org/loc/) and updated the data files by using the latest information from the Internal Revenue Sevice. Cliff Landesman, who did the work, predicts that many searches will be noticeably faster. The information returned is the most recent available, with hundreds of additional organizations and corrected records. (I know that corrections have been made because a long-standing error in the address of The Evergreen State Society is no longer there!)

It is probably worth revisiting where data in the Nonprofit Locator come from. We download the Master Business File published by the IRS and do some data-processing work to make it easier to search. We do not change the information in any way. Errors or omissions in the Nonprofit Locator can only be corrected by advising the IRS of the right information. There's some advice about how to do this efficiently in the instructions on how to report an error for the Locator (see http://www.nonprofits.org/loc/report.html).

Directory of Consultants to and for Nonprofits

Action without Borders, the publishers of the Idealist site -- http://www.idealist.org/ --where nonprofits can describe their programs and services whether or not they have a website of their own, have recently added a similar service for consultants and others who provide products and services that might be useful to nonprofits. (Unlike the Idealist, consultants' listings require a fee.)

Announcing this service, Ami Dar, Director of Action without Borders, wrote "In asking our users what else they would like see on the site, one answer that has come up repeatedly is the need for an effective global directory of consultants, products and services for nonprofit and community organizations.

"To meet this need, we have just launched an online directory that enables you to enter and update detailed information about your services and products, as well as about internships and job openings in your company."

(See http://www.idealist.org/pro )

"Users can then search for this information by location, specialty, keyword and other parameters to find the best products and services for their needs."

Announcements of New Bulletins

We maintain a distribution-only mailing list to let people know of changes in this bulletin. If you would like to have us add your email address to the list, please send a message to email@tess.org including your full name as well as the address. We do not exchange or sell this list nor allow it to be used by anyone else for any purpose.

If you know of information that should be included in the NONPROFIT FAQ, find an error, or see a lack you would like to have us try to cover in the future, please let us know by writing with as much detail as possible to editor@nonprofits.org. We'll do our best to follow up on all suggestions we receive.

(If you do write about an error, please include the full URL for the item where the mistake was found. Without that information it can be very difficult to make any correction....and those suggestions have a way of slipping to the bottom of the pile.)

Thank you for your interest.

--Putnam Barber, President

The Evergreen State Society -- http://www.tess.org

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