Public Trusts, Public Records
by Phil Tajitsu Nash

Nonprofit groups have long been showcased in columns like this one, and rightly so. Social services, legal services, and other essential activities would operate at a greatly reduced level without these underpaid, overworked public-spirited organizations. At the same time, my colleagues and I have an obligation to do more than reprint press releases -- one of the reasons why I am part of the team now looking into nonprofits’ finances.

Healthy inquiry and constructive criticism are essential in a venue where public money are involved. And for all 501c3 nonprofits, such funds are involved. Even if they take no tax dollars, such groups are exempted from paying income or property taxes, and they must file annual IRS disclosure forms through which the public can get a broad picture about what they’re bringing in and how they spend it.

This month, the IRS began requiring nonprofits to provide copies of such forms to whoever asks, making it easier to analyze where our community’s dollars are going and how efficiently that money is being spent.

No doubt there are those who wish the IRS (and us) had not saddled them with the chore of sending out materials.

On a not-for-attribution basis, some nonprofit folks have let us know they aren’t happy. They want to know why we are asking for this information, how it will be used, and whether they will be compromising their donor lists or other tactical and strategic information in the process.

The short answer to all of these questions is that Form 990s are already public documents, and anyone of any background, persuasion, or interest can request one. Though the IRS does not require nonprofits to disclose donor names, the salaries of its highest-paid staff members are often public knowledge, just like those of public corporations’ executives and public employees.

Rather than wanting to disclose less information, my hope is that public-spirited nonprofit employees will use the Form 990 disclosure as an opportunity to show how well they are using the resources entrusted to them. If they are doing a lot with very little (as most of the groups are), then this should be a moment to shine, not to hide. Open demonstrations of integrity encourage further giving.

And there are some inefficiencies built into any undercapitalized operation, and while elbow grease is used to make up for lack of high-speed copiers, the bottom line is that nonprofits have to be as accountable when it comes to providing information as any other organizations requesting special tax status. Groups that fear being deluged with this chore can put their forms on the World Wide Web -- Eric Mercer (www.990online.com) has offered to post them for a reasonable cost.

The bottom line is that the public has a public relationship with certain organizations, which entails certain perks and certain responsibilities. Demanding accountability from our elected officials, from corporations, and from our nonprofit organizations will result in a situation where our public money will be more effectively and efficiently spent.