The IRS is delving deeper into the charity watchdog game: For the first time in 20 years, it is reforming the 990 tax form that charities must fill out, The Wall Street Journal reports.
Over the past decade, as the number of charities in the U.S. has increased by about 85 percent, the number of dollars going into those roughly 1.2 million charities has swelled to about $2 trillion, the Journal says.
And a host of groups dedicated to watching how charities spend their money has cropped up, including charitynavigator.org, which rates charities based on their financial efficiency, and guidestar.org, which makes the 990s available to the public for free.
The new 990 has been in the works for a while and has been broadly discussed in the philanthropic world, but it seems that the government is really in crackdown mode when it comes to making sure that charities are on the up and up.
And some folks have been anxious about what they will now have to reveal very publicly. The new form will certainly be more thorough than the old one, whose juiciest info was really the salaries of top employees. (Yes, if you work for a non-profit, you can go to guidestar.com and find out how much your boss makes.)
Here are some of the new items charities will now have to reveal, according to the Journal:
The revised tax form devotes an entire section to how a group is run. Nonprofits will now have to disclose whether their boards review the tax form before it is filed and what metrics organizations use to determine pay for top executives and managers. Other new disclosures include whether an organization has a whistleblower policy and how many board members are independent.
When reporting compensation, groups now have to report payouts using classic tax-filing standards found on W-2 and 1099 forms. Under certain circumstances, such as when an employee makes more than $150,000, additional disclosures are triggered, including supplemental retirement programs and stock compensation, which nonprofit executives sometimes receive from an affiliated for-profit group.
Other disclosures include whether nonprofits provide executives or other employees with first-class air travel, expense accounts, housing allowances and personal bodyguards, chauffeurs and lawyers, among other perks.
Greater scrutiny by the government could lead to a crackdown on non-profits and could cost many their tax exempt status.
The government seems serious about keeping charities clean. The new 990 comes at the same time that the Minnesota Supreme Court ruled that a non-profit day care center had to pay property taxes – from which non-profits are typically exempt – because it did not specifically help the poor.
I’ll have more on that and its effect on Jewish organizations at some point soon …
