Investigating charities

and other nonprofits

TODD WALLACK, REPORTER, BOSTON GLOBE @TWALLACK
HOLLY IVEL, SR. DIR. BUSINESS DEVELOPMENT AND DATA SERVICES, CANDID
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How big is the nonprofit sector?

 2.8M organizations – Active + Historic  Many types of nonprofits exist

 1.7M currently registered with the IRS (29 IRS Subsection codes):
 Does not include:
 Government Instrumentalities
 Many Churches
 Some 501(C)(4)’s
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Non-profits by size

By revenue

Many documents overlap with
other types of companies
 State incorporation filings
 Audited financial statements
(including management letter)
 Court records
 Web sites / social media posts
 Annual report
 Property records
 Bond prospectuses (EMMA)
 News articles
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 Government contracts/grants
 Health inspections
 OSHA/Workplace safety inspections
 State regulatory filings for certain
industries, including hospitals
 Aircraft/boat registration records
 State and federal campaign
contributions
 Patents/trademarks
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Some documents are distinct to non-
profits

Application for tax-exempt status

 1023-EZ/1023
 1024
Annual IRS filings
 990-N: Less than $50,000 in Gross Receipts
 990-EZ: Between $50,000 and $200,000 - 4
pages plus Schedules
 990 Greater than 200,000 in Gross Receipts
- 12 pages plus Schedules
 990-T
 990PF - All Private Foundations
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What’s in the 990?

A. Public Support Test

Main Form

1. Summary
B. Contributors (only released for PFs)

Schedules
2. Signature block C. Political/Lobbying
3. Program Services D. Supplemental Financials
4. Required Schedules E. Schools
5. Other IRS filings F. Activities outside of US

6. Governance G. Fundraising/Gaming
H. Hospitals
7. Compensation & Contractors
I. Grants – org/individual
8. Revenue
J. Compensation
9. Functional Expense
K. Tax-exempt Bonds
10. Balance Sheet L. Transactions with interesting parties
11. Reconciliation of Net Assets M. Non-cash contributions
12. Financial Statements/Reporting N. Liquidation/termination
O. Catch all
R. Related organizations
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Summary Page
Electronic Filing

 A lot of basic information

that can help you in your
research.

Paper filing
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Part 1

Top line #’s – give you a basic picture

 # of board members
 # of Employees
 Prior year & current year
 Expense
 Revenue
 Net Assets
 Checkboxes….
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Part 3: What does the organization do?

This is where a non-profit is

asked to describe it’s top 3
programs.
 How specific do they get?
 Do they provide any
numbers?
 What does the expenses
associated with these
programs look like?
 Look for Additional Data &
Schedule O
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Additional Data

 Don’t forget to go look….

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Part 4 - schedules
When does the nonprofit need to fill
out a particular Schedule?

Completing a schedule does

not necessarily mean the nonprofit did
something wrong …

But in some cases it does –

Question 25a – excess benefit
transaction for instance.

Key Schedules:
D -Supplemental financials
J - Compensation
L -Transactions with interested parties
O - catch all
R - Related organizations
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DID THE ORGANIZATION

MAINTAIN COLLECTIONS
Lots of OF WORKS OF ART,
interesting lines HISTORICAL TREASURES,
OR OTHER SIMILAR
ASSETS?
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Part 6 - Governance
So many good questions….

How many board members are

Independent?

Diversion of Assets?
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.
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Part 7 - Compensation

Who has to be listed?

 Officers
 Directors
 Trustees
 Key employees – 3 part test
 Highest compensated
Rules are slightly different in each
case and depend on if the person is
‘Current’ or ‘Former’
 Above/below the line
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Personnel listed across organizations

 NRA Foundation – 501(c)(3)

Sometimes you will find personnel

overlaps – that can help you better
research relationships between
organizations.

This is more common than you think.

Wilson was one of more than 50,000

individuals I found working for two
organizations last year when I did the  National Rifle Association – 501(c)(4)
compensation report.
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Schedule J
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Schedule L – Transactions with
Interested parties
 Loans
 Grants
 Business Transactions
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Schedule L
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Schedule R

Many types of relationships possible

 Disregarded Entities
 Related non-profits
 Related taxable – partnerships
 Related corporations…

Duke University is a good example

of a large non-profit that has
many many types of relationships
in play…
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How do you get access to 990’s?

 ProPublica
 GuideStar
 Foundation Center 990 Finder
 Citizen Audit
 State websites
 Open 990
 Nonprofits' own websites
 Request it from IRS (Form 4506-A,)
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What are organizations required to
provide you?
https://www.irs.gov/charities-non-profits/exempt-organization-annual-filing-requirements-
overview
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Guidelines

 Program Expenses - Spend at least 65% of its total expenses on program

activities. (BBB – Wise Giving Alliance)
 Board has at least 5 members
 Independent
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Resources

 Great article outlining key legal terms - http://www.nonprofitlawblog.com/nonprofit-law-101-

for-journalists/
 IRS 990 forms and filing Instructions - https://www.irs.gov/charities-non-profits/current-form-
990-series-forms-and-instructions
 NASCO - https://www.naag.org/publications/naagazette/volume-4-number-5/get-to-know-
national-association-of-state-charities-officials.php
 IRE tipsheets
 State CPA associations/Nonprofit management schools
 GuideStar Pro subscription services - https://learn.guidestar.org/products/guidestar-pro
 GuideStar Compensation Report - https://learn.guidestar.org/products/nonprofit-
compensation-solutions/guidestar-nonprofit-compensation-report
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APPENDIX
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FISCAL YEAR VS. FORM YEAR

Fiscal year versus form year can be

confusing, so we’ve put together the table Fiscal Year Fiscal Year 990 Form Initial IRS 1st Filing 2nd Filing
Fiscal Year
Begins Closes Year Deadline Extension* Extension*
below to help frame up the differences.

• Fiscal year represents the year in 7/1/2014 6/30/2015 2015 2014 11/15/2015 2/15/2016 5/15/2016
which an organization’s financial books
closes.
1/1/2015 12/31/2015 2015 2015 5/15/2016 8/15/2016 11/15/2016
• Form year, on the other hand, aligns
with the beginning of an organization’s 7/1/2015 6/30/2016 2016 2015 11/15/2016 2/15/2017 5/15/2017
fiscal year.
1/1/2016 12/31/2016 2016 2016 5/15/2017 8/15/2017 11/15/2017
Organizations have an initial filing deadline
of the 15th day of the 5th month after the
7/1/2016 6/30/2017 2017 2016 11/15/2017 2/15/2018 5/15/2018
fiscal year ends but can ask for two 3-
month extensions, often delaying their
filing until 11 months after fiscal year end. 1/1/2017 12/31/2017 2017 2017 5/15/2018 8/15/2018 11/15/2018