News and analysis
June 15, 2016

IRS Unleashes Flood of Searchable Charity Data

The Internal Revenue Service opened a gusher of information on nonprofits Wednesday by making electronically filed Form 990s available in bulk and in a machine-friendly format.

The material will be available through the Public Data Sets area of Amazon Web Services. It will also include information from digital versions of the 990-EZ form filed by smaller nonprofits and form 990-PFs filed by private foundations.

The change means the public will have quicker and more in-depth access to the 990, the primary disclosure document for and main source of information on tax-exempt organizations. The form includes data on groups’ finances, board members, executive pay, fundraising expenses, and other aspects of their operations.

The filings were previously made public as PDF documents, requiring costly manual entry or imprecise character-recognition technology to extract the data in bulk and make it searchable. Now the information can be downloaded and parsed for free by anyone with a computer.

"With e-file data, you can easily and precisely extract individual items on the form," Carl Malamud, an open-government advocate and the president of Public.Resource.org, wrote in an email. The nonprofit works to make public information more accessible, and Mr. Malamud has been at the forefront of efforts to liberate data on the nonprofit sector.

(The Chronicle of Philanthropy was one of several media organizations with which Public.Resource.Org coordinated to request e-files in 2015 and it later helped test the IRS’s system for distributing e-filed 990s.)

In response to a lawsuit filed by Mr. Malamud, a federal court ruled in January 2015 that the IRS must release data from 990 forms in a machine-readable format upon request. Last June, the agency announced it would make all data from electronically filed returns generally available.

The change means researchers and charity watchdogs such as GuideStar will no longer have to pick and choose which parts of the forms should be keypunched into their databases. "There are parts of this information that we have never had electronic access to and I will be really interested to see what some of that data is like," said Chuck McLean, a senior research fellow at GuideStar.

Spotlighting Inconsistencies

Mr. McLean said more sunshine on nonprofit operations might shed some light on accounting inconsistencies across the sector, which sometimes make comparing charities difficult. In the past, The Chronicle’s own analyses of Form 990 data have hit snags because nonprofits account for seemingly identical expenses or receipts in different ways.

The 990 numbers are "good approximations as opposed to real facts," Mr. McLean said.

Some accounting inconsistencies may be attributed to the "exponential" growth of the form, to which several new sections were added in 2008, according to James Sheehan, chief of the Charities Bureau of the New York State attorney general’s office. Mr. Sheehan said reporting confusion may be compounded by a lack of industry audit standards for the 990.

Nevertheless, Mr. Sheehan is bullish on the opportunities the new data access will bring. For example, he said analysts at his agency could begin to build predictive models of charities’ behavior, potentially flagging groups at risk of shutting down due to dire financial straits or unearthing clues of self-dealing or embezzlement.

Despite the enhanced transparency, much nonprofit data will remain hard to find and laborious to analyze, as nearly a third of all 990s were filed on paper in 2015.

Mr. McLean said it’s mainly smaller nonprofits that opt to file a paper 990 with the IRS, adding that he hopes recent legislative efforts to require mandatory electronic filing gain traction.

Send an email to Peter Olsen-Phillips.