An Attempt to Uncover The $4.3 Trillion Nonprofit Sector

by Gary Snyder

For the better part of a decade, we've complained about secrecy in the charity world. We've spoken about it in various venues including a book (Silence, 2011), on radio and television talk shows, a twice-monthly e-newsletter, and this blog.

It is not coincidental that secrecy is the world in which the charitable sector wants to live. Its leading organization, Independent Sector, wants the outside world to rely on the sector's self-regulation with no one peeking in. Until very recently, when a few attorneys general have caught wind that they may be able to gain political support by uncovering charity fraud, virtually nothing has been done to stop billions of dollars of malfeasance. The IRS, Congress and the courts remain in denial that the trillion dollar sector is severely compromised. 

Now there is a call for the uncovering of the sector. Carl Malamud, a California-based transparency activist, is suing the IRS over a problem---the agency’s unwillingness to let the rest of us easily scrutinize nonprofits. He notes that the Securities and Exchange Commission started putting the submissions of public companies online back in the 1990s. Nonprofit tax filings — known as Form 990s — are, technically, public, but only a small number of organizations are on GuideStar for the public's viewing. You cannot scan through data fields to find juicy tidbits like salaries, revenue and expenses. 

The 990s are important.  The nonprofit sector is huge, bringing in $1.87 trillion and sitting on $4.3 trillion in assets in 2009, which accounts for 9.2 percent of all wages and salaries paid in the United States. As the Aspen Institute argued in a paper earlier this year, if their 990s were made available in machine-readable format, it would be a lot easier to spot fraud and abuse, see where charitable resources are being deployed and understand their role in the economy.

Put off at various levels, Malamud filed a lawsuit in U.S. District Court in California’s Northern District to overturn denials — and get those numbers in crunchable form faster than it would take the administration to prod the IRS into making it official policy.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)