Tag Archives: nonprofit

IRS 990s are Information Hidden Right Under Our Eyes

New Orleans       Forty years ago I can remember reading something somewhere way before the internet, big data, and ubiquitous computers that one of the ironies of life and work in America was the fact that we had access to way, way more information than we ever had the ability to analyze, absorb, and act on.  Even then we were an information-overload society.  The point was probably being made about freedom-of-information and open records laws that were common then, but often hid information right under our eyes, because either no one was looking or no one had the ability to process all of the data.

These days with high speed computers, we have a lot more of that information, but it seems that the same observation could be made, perhaps even more strongly, that we now, not only in the United States, but virtually everywhere, have more access to information than we have the ability to evaluate and put into action.  I think about this a lot.  For several years, I have sat on a database created from millions of records of filings by banks in the United Kingdom on their lending programs that was assembled by a volunteer in Scotland who was a graduate student in the university there in Edinburgh.  He got up to the last mile, and then fell off the radar without finishing.  We had the data, but couldn’t release it, because it wasn’t quite finished, and I’ve failed to convince anyone else to climb the ladder high enough to do the job.

ACORN, Local 100, and Labor Neighbor Research & Training Center did a long dive into all of the records of nonprofit hospitals in Arkansas, Louisiana, and Texas to determine whether or not they were providing charity care.  The results were horrid, but we didn’t release that either because we were missing some of the institutions.  Looking at rural electric cooperatives in the south was equally appalling in terms of governance, self-dealing, and diversity, but we did manage to get that done and out the door.  These projects were possible thanks to IRS 990s.

IRS 990s are straightforward in a crooked, roundabout way.  All 501c3 tax exempt organizations are required to file them.  Anyone can see them.  But they are another example of information right under our eyes that take time and effort to understand, so lie fallow or, frankly, hidden in plain sight.  I was surprised this week with our union when negotiating with a large, nonprofit healthcare company that they seemed to forget their financials were available to the union as they obfuscated on wages.  Working with the staff of another nonprofit earlier this year I was even more surprised that the staff of the organization had never looked at the 990s to understand more about where they worked.  Wow!

There are some sites that offer easy access to various databases of 990s.  Many are available for free from Guidestar and ProPublica.  I read of another called Citizen Audit that was interesting because it used Optical Character Research and with multiple servers was able to make 990s searchable, which is a breakthrough for all seekers.  Much of it is free, though it also has various pay levels from mid-$300 to closer to $600 for super sleuths. I took a look and searched using ACORN as the keyword.  A list of more than 100 organizations came scrolling down.  Most of those that I recognized and were current were the various Mutual Housing Association of New York (MHANY) corporations and its various ACORN housing funds and millions in assets.  MHANY’s name derives from a deal with the City of New York to settle ACORN’s squatting campaign when Mayor Koch caved in, but in Trump-like fashion would NOT allow the result to have ACORN in its name.  I’m so proud of Ismene Spiliotis, who has been the sparkplug, wizard, and executive director of MHANY all of these years!

I also learned in my couple of minutes of search that ACORN, which was NOT a 501c3 and neither obligated nor desirous of ever filing our information, somehow under a new comptroller did in fact file a 990 in 2003 for reasons unknown and unauthorized!  They didn’t check the box saying they were a 501c3, so they knew better, but it certainly proves my point that we always learn something, hidden right under our eyes, if we are willing and able to look.

Go ye and do likewise!


Please enjoy Cat Power’s You Get. Thanks to KABF.


The Rich are Wheeling and Dealing for Themselves at Private Foundations

New Orleans       The Wall Street Journal and its reporter, Andrea Fuller, provided a public service for all of us by reviewing the publicly available tax filings of thousands of private foundations.   Their subject was the willful lack of compliance with the almost fifty-year prohibition against self-dealing.  Self-dealing occurs when private foundations do business with insiders like their officers, directors, and substantial donors, i.e. the rich themselves.  Such dealings are supposed to be against the law and trigger tax penalties for these tax-exempt institutions.  Spoiler alert! The Journal found that this law is broken with impunity, and, surprise of all surprises, creating and running a private foundation seems to mainly just be a tax dodge.

The numbers were astonishing.  The Journal found 1800 foundations that flaunted the fact that they did business with insiders in their latest publicly available returns in 2016.  About 10,000 private foundations checked boxes indicating that they legally compensated insiders.  Essentially this means that in the very form they were giving the Internal Revenue Service they were thumbing their nose at the IRS with impunity.   There isn’t much risk in this because the IRS only imposes extra taxes on about 200 individuals annually out of the pool of insiders that are feeding at the trough in more than 112,000 private foundations.  The odds are way better than at Las Vegas that the rich won’t get caught.  Everyone who believes the Trump administration is going to beef up its review of private foundations has forgotten perhaps that Donald Trump was caught making political donations to candidates from his private foundation and simply paid back the money, no harm, no foul.

Just to be clear, a private foundation is a tax-exempt entity created by rich individuals and families ostensibly for charitable purposes.  There are more than one-hundred thousand of these babies.  Think Bill and Melinda Gates.  There are over 1.2 million public charities, classified as 501c3’s, that also exist for similar charitable purposes but receive sufficient support from the public to continue to qualify.  The Journal helpfully noted that 76,000 private foundations have less than $1 million they are sheltering, 28,000 have between one million and ten million in assets, and then there are 8000 whale-sized private foundations that have more than ten million in assets.

The rich don’t just make their money, they disguise a pile of it for tax purposes in private foundations.  The Journal’s report is clear that a lot of them continue to use these foundations as private bank accounts and spread the wealth to family and friends calling them either trustees or private contractors despite the clear prohibitions of the law.  Paying slick lawyers is still cheaper than paying taxes as long as you can feather your own nest, it seems.

Trust me on this.  There will be no sudden investigation or cries of outrage in Congress where these same folks are likely or potential donors nor in the White House where they may be family and friends in the “we all do that” Trump club.  Meanwhile, as they say, the rich get richer, and private foundations help them stay that way, while we pay taxes.