BoardSource’s director of research and evaluation suggests how nonprofit research newcomers and students can best wrestle this beast to the ground and extract value (without too many scars that you wouldn’t want to show around the office).

Nearly all quantitative nonprofit researchers eventually encounter, and have to get familiar with the ins and outs of, the IRS’s “Form 990” —  the publicly available tax return filed by approximately 1.41 million organizations annually. Below is your road map.

Bottom line: What as a researcher can I get from the 990?

Some of the research topics pursuable using the 990s are, for example:

• Broad organizational “demographics”: Page 1 of the main 990 contains contact and website information, a brief statement of the organization’s mission and significant activities, and the numbers of employees and volunteers.
•  Revenue streams:  Page 1, lines 7 through 11, contain information on contributions and grants, program service revenue, investment income, other revenue, and unrelated business income. Part VIII, lines 1a through 1g, ask for income from federated campaigns, membership dues, fundraising events, government grants, and income from related organizations.
• Expenditures: Part IX shows, among other things, expenditures on lobbying, professional fundraising, and payments of travel or entertainment expenses for any federal, state, or local public officials.
• Executive compensation: Part VII, Section A, and Schedule “J” (if present) contain information on the organization’s five current and former highest-compensated named employees earning more than $100,000. This includes not only their base compensation, but also retirement, non-taxable benefits, and bonuses and incentives. (Want to know who the highest-paid university employee in the country is? Hint: He’s not an academic, a Nobel Prize-winner, or a college president.)
• Board compensation: Section VII, Section A, asks for names and compensation for all board members, regardless of level of compensation, if any.
• Governing body characteristics and practices: Part VI, Section A, contains information on a variety of governance, management, and disclosure practices.
• Funding patterns: The 990-PF’s Page 11, Part XV, lists grants and contributions paid and approved by private foundations, including the name and address of recipient, status of recipient, and the purpose and amount of the grant. The main 990, Part II, lines 22a and 22b, show the value of grants paid by other nonprofits.
• Contractors:  Part VII, Section B asks for the five highest-compensated independent contractors that received more than $100,000 of compensation.

The IRS itself compiles data from the 990s in its Statistics of Income and does its own compendium and studies relating to tax-exempt organizations. The Urban Institute issues an annual summary of the nonprofits sector.

So where do I start with nonprofits?

Many of us believe it is unfortunate that “nonprofits” or “tax-exempt organizations” are labelled and defined by what they are not, rather than by what they are.  After all, you would not expect to see Toyota advertising that “We make the world’s best non-bicycles” would you? Fortunately, more appropriate terms are increasingly used in the research world, such as “community sector” and “social sector” organizations. But for now, in order to find and use official statistics, we have to live with the tax regulations that define the labels and parameters of nonprofit fiscal existence. The definitive rules and procedures for tax-exempt organizations are detailed in the IRS’s Publication 557.

There are 30 categories of 501(c) organizations in the U.S., but but over 76 percent (by number of tax returns filed in 2012) are 501(c)3’s (i.e. “Religious, educational, charitable, scientific, or literary organizations”), followed by 501(c)6’s (“Business leagues, chambers of commerce, and real estate boards”) which account for 7.1 percent, 501(c)4’s (“Civic leagues, social welfare organizations, and local associations of employees”) which constitute 4.7 percent,  501(c)5’s (“Labor, agriculture, and horticultural organizations”) with 4.1 percent, and 501(c)7’s(“Social and recreational clubs”) with 4.0 percent. Together these five categories constitute over 96 percent of all organizations in the 501(c)3-(c)9 range, and no other 501(c) has more than 2 percent.

What is the IRS 990?

Nearly all organizations have a responsibility to file a 990 with the IRS every year, but what is commonly referred to as “the” 990 is actually a suite of seven different “990” forms (the “main” 990, along with the 990-EX, 990-N, 990-PF, 990-T, 990-W, and 990-BL), plus 15 includable schedules (“A” through “O”,  and “R”), and 32 other ancillary forms that exempt organizations may, or have to, file. All these forms vary in their requirements and thresholds for completion. Failure to file the appropriate form for three consecutive years results in automatic revocation of tax exempt status. Approximately 35 percent of nonprofits registered with the IRS file either the 990, the 990-EZ, or the 990-PF.

Just which forms an organization files generally depends on its level of financial activity, and so researchers need to bear in mind what kinds of nonprofits are being a systematically included and excluded on different forms. For example, religious congregations and religious organizations with less than $50,000 in annual revenue are not required to register with the IRS.

Organizations with gross receipts of less than $50,000 file the 990-N (the so-called “e-postcard“), although they may opt to submit a full return. The e-postcard requires just the Employer Identification Number (EIN), the org’s legal name and variants thereof, address, tax year, name of a principal officer, website address, and confirmation of less than $50,000 in receipts (by self-report). The IRS has an “Exempt Organizations Select Check” search tool for organizations filing a 990-N and a downloadable database of filings, but before 2006 such organizations were not required to file.

Organizations with gross receipts of less than $200,000, or total assets of less than $500,000, may file a 990-EZ  (short form) or a 990. The 990-EZ is also used by nonexempt charitable trusts and Section 527 political organizations. Those organizations with gross receipts greater than or equal to $200,000, or with assets greater than or equal to $500,000, have to file a 990.

Private foundations, regardless of financial size, have to file a 990-PF.  Split-interest trusts (including charitable remainder annuity trusts, charitable remainder unitrusts, charitable lead trusts, and pooled income funds) have to file a Form 5227. Finally, any excise taxes reported by charities, private foundations, and split-interest trusts have to be reported on Form 4720, and unrelated business income shown on Form 990-T.  

Why do researchers rely on the 990?

Interest is in the eye of the researcher of course, but the 990’s research cred comes from: (1) Death and taxes being the only certainties gives the IRS the clout to ask for, and get, information that has to be correct (or at least attested to as correct) and which is likely already audited. (2) No other developed country has such a detailed and large corpus of financially intimate information publicly available on nonprofits at the individual organization level.  (3) Organizations are sometimes reluctant to respond to direct requests about personnel and salaries, so the 990 allows you to bypass that. (4) Recent “big data” innovations have stimulated the growth and (usually free) searchability of third-party websites offering researchers literally hundreds of millions of pages of 990s, like those below.

But what tripping points do I have to watch out for?

The main downsides to the 990 are that they can be available sometimes only two or three years before present, and there are sometimes omissions of information, making it difficult to get a comprehensive, up-to-date view.

If you are researching the budget size of the organization, “Gross receipts” in Box “G” will likely not be the same number as “Total Revenue” in line 12. “Gross receipts” includes the amount on line 12, but adds back some items that are netted against revenue on Part VIII’s “Statement of Revenue."

In addition, the IRS has changed the 990 in some way every year since 2008:

• In 2007, “membership dues” were listed separately as “revenue” in Part I, line 3, but from 2008, they are part of “Contributions, Gifts, Grants, etc” in Part VIII, line “1b."
• In 2010 some of the size thresholds were revised upwards, resulting in a decline in the number of returns for the first time, but not necessarily a “real” change in aggregate dollar numbers.

• In 2013, the IRS revised Schedule H’s questions on “Community Benefit Reporting” and revised the ways nonprofits report certain compensation information, which may reduce the amounts showing on Schedule “O."

• In 2014, the IRS revised Schedule A to include questions on “supporting organizations."

A complete list of detailed changes is given by KPMG and the IRS.

Where can I search for an individual organization’s 990?

Individual nonprofits recognized by the IRS are listed by name in the IRS’s Exempt Organizations Business Master File Extract . The EOBMF includes cumulative information extracted monthly and is available by state and region. (Files are in CSV format and contain 1.56 million records.) Because of name and address changes for organizations, the most “solid” identifier is the Employer Identification Number (EIN), also known as the Taxpayer Identification Number (TIN), found in Box “D” on the first page of the full 990.

Several third-party collector sites have done the heavy lifting with the EOMBF for you. The Economic Research Institute (ERI)  (an executive compensation site), Serious Givers (a donor information site), the National Center for Charitable Statistics (part of the Urban Institute), the Foundation Center, Charity Navigator (intended as a “guide to intelligent giving”), ProPublica (a public interest journalism site), and GuideStar all have free search tools for finding the 990s of tax-exempt organizations. ERI generally goes back furthest in time (to the mid-2000s in many cases). The Foundation Center sometimes blanks out part of the 990 front page (which is puzzling, since it is public information and is available on the other third-party sites).  GuideStar offers paid searches if you are after customized categories of organization rather than an individual nonprofit.

GuideStar and ERI also show National Taxonomy of Exempt Entities  (“NTEE”) codes with their records, allowing inter-organizational comparisons by mission type (see below). The NTEE Classification System is used by the IRS and the NCCS to classify nonprofit organizations, and by the Foundation Center to classify both grants and grant recipients (typically nonprofits or governments). The 681 NTEE codes typically use an upper case letter and two digits, such as “A51 – Art Museums.” However, the Foundation Center uses a slightly different version of this system, with more codes. It is important to note that NTEE codes are not the same as IRS “Activity Codes” that reflect a nonprofit organization's “purposes, activities, operations, or type.” The Activity Code is historical only and is no longer being updated.

And don’t forget, if those third-party collecting sites don’t turn up what you are looking for, you can always go direct to the individual organization and request to see its 990s. By law, an exempt organization must provide a copy to an individual who makes a written or in person request. Anyone can make a request, and the requestor does not have to state his or her reason for doing so. The organization has 30 days to respond to written requests (or just the day of, if requested in person), but note, the organization is allowed to charge you for reasonable copying and mailing costs.  Many organizations now routinely post their latest tax year’s 990 on their website (check to see it has posted the complete version) but some still think erroneously that their 990s are somehow confidential.  If that is the case, you can complain to the IRS about noncompliance, or follow the American Bar Association’s guide to filing a Freedom of Information Act (“FOIA”) request.

Happy Sleuthing!