Why you should cover poverty and nonprofits in your county
In 2010, nonprofits contributed products and services that added $779 billion to the nation’s gross domestic product; 5.4 percent of GDP. Nonprofits are also a major employer, accounting for 9 percent of the economy’s wages, and over 10 percent of jobs in 2009.
In addition to sheer size in the economy, here are five reasons to cover nonprofit organizations in your area:
- People who donate money to nonprofits need unbiased, local information on how that money is spent.
- Communities rely on nonprofits to serve significant needs, especially in services to the poor – some of which local governments cannot or will not provide.
- Nonprofits are often recipients of government contracts and grants, so covering them is part of holding government accountable.
- Nonprofits are part of the solution to poverty and related problems, and those societal issues affect most of your community.
- Nonprofits don’t pay taxes, and donors can get a tax deduction for giving money to certain nonprofits. The tax-exemption and the charitable deduction mean revenue not collected by the government, and so makes nonprofits an indirect beneficiary of the government.
How to measure the opportunity to cover poverty and nonprofits in your county
To get an idea of the impact and importance of nonprofits in your county, or all the counties in your market area, do a search with GuideStar.org, the National Center for Charitable Statistics, MelissaData and /or the IRS to answer these questions:
- How many nonprofits are registered?
- What’s the total income of nonprofits?
- What are the total assets of nonprofits?
- Who are the biggest nonprofits, in terms of revenue?
- How many nonprofits have had their tax-exempt status revoked by the IRS?
All tax-exempt nonprofit organizations except churches and state institutions must submit an annual report about their finances to the IRS – Form 990, 990-EZ or for those with small incomes, 990-N (the e-postcard). Private foundations must file 990-PF. Since the completed forms are public documents, the data sources explained here all draw on those filings.
Understand the differences between these sources of data:
- With free registration, Guide Star allows you to search by state and by city, and offers basic info about each organization as well as any federal forms they have filed in recent years. You can also search for an individual nonprofit by name or Employer Identification Number (EIN). GuideStar works best for looking at one or two cities, or to quickly get information about specific organizations.
- The NCCS DataWeb is geared to more elaborate data quests. It also requires registration, but it has extended tools to search all their data by specific categories. It is the easiest way to pull a list for an entire county of all nonprofits, including their income and assets figures. This is often the most useful format for local reporting. It also allows you to create tables comparing the data in different ways.
- MelissaData allows you to quickly pull a list of nonprofits by zip code. The list will include the income and assets figures for each nonprofit, compiled from the latest 990s filed.
- The IRS database includes exempt nonprofits for the entire U.S.; or you can retrieve by state, here. If there are multiple cities in your market area, or to retrieve additional details, you can download this file and then filter to look at specific areas. You can also do larger analyses to compare states or regions.To get the most comprehensive data, you would need to download three IRS lists: all exempt organizations, all revoked organizations, and e-Postcard filers (generally, this is those with income of less than $50,000).
Even a small county may have 100 or more nonprofits, with tens of millions in revenue each year. This can be a significant part of the local economy.
By digging into the 990 reports that nonprofits are required to file, you can also calculate or estimate:
- How many people do local nonprofits serve?
- How many grants and government contracts did nonprofits in your county or counties receive?
- How many people are employed by local nonprofits?
- What percentage of expenses by local nonprofits went to salaries? What percentage went to programs and services?
- How much of the community’s needs are met by nonprofits?
A step-by-step approach to finding and reporting important stories
The economic downturn has hit some nonprofits with a double whammy: Demand for services went up, but donations and government grants went down.
With less money to go around, there is more scrutiny of the services offered by nonprofits and increasing interest in holding them accountable for the results they get with public dollars. Some programs don’t effectively address the problems they were intended to. Duplications of service can happen when nonprofits don’t coordinate their work.
Reporting can address the question of whether worthwhile services are being provided – and by whom.
In this step-by-step approach, let’s examine the issue of accountability for nonprofits and how they serve the needs of the poor.
You will probably want to choose a particular problem related to poverty in your community – homelessness, low literacy, health services, nutrition – and follow these steps with that problem as your focus.
You may want to start with Step 4 – interviewing people in the community – before deciding where to focus your story and your data research.
Determine the scope of services offered for this problem by nonprofits in your area. This background will give you data for your story, as well as a list of potential sources.
Compile the list of charitable nonprofits in your area using one of the websites on the previous page. If the list is very large, or if you are covering a major urban area, you may decide to cut out those with less than $50,000 in annual revenue.
Refine the list to those whose primary mission is offering human services benefiting low-income people. You may need to look at their detailed listings on GuideStar or NCCS [in NCCS Charity Filers list, follow the EIN links], or review their website.
Don’t neglect the categories that may require special reporting and could result in stand-alone stories. For example: What percentage of expenditures by your local nonprofit hospitals goes to care for low-income? How many of the “educational” nonprofits are private schools versus how many have literacy, GED or other special programs for poor people in your area?
Also, most churches are not on the public lists of nonprofits because they are not required to file with the IRS, but many do offer services for low-income people. Local councils of churches may be a source for that information.
Review the 990s for the nonprofits on your highlighted list. Pay special attention to the expenses and programs – you’ll want to know how much they spend on actual services, compared to administration, fundraising and other costs.
Compare mission statements and programs among similar charities. Where is there duplication and overlap? Are there obvious gaps in services? Do the salaries seem bloated?
Interview the clients of these nonprofits. How well do they feel their needs are met? What do they feel is missing? Where do they get information about services?
Talk to other people in low-income neighborhoods about where they turn when they’re in need. Do they think first of government agencies, nonprofits, churches, neighbors? What factors influence their choices?
Armed with the experience and perspective of the community, you’re ready to interview the staff of the nonprofits about their programs. Where do they feel they are most effective, and where are they not meeting needs?
How do they know what’s effective? Ask how they measure program effectiveness. Are these measures carried out with objective monitoring and evaluation tools, or are they mostly anecdotal? Is any independent evaluation of programs done?
How do they address the specific complaints of the community?
Ask what board members and the staff thinks are the gaps in their services. If there are several organizations doing the same work, ask about this overlap and whether there any coalitions or other forms of cooperation. What is accomplished by this cooperation? Ask if the community would be better served by consolidation of organizations to reduce overhead.
Talk to foundations and government agencies who fund these nonprofits. How do they monitor and evaluate the performance and effectiveness of programs? Do they perform any checks with independent evaluators?
How do they hold nonprofits accountable for poor performance?
The National Center for Charitable Statistics is a wealth of information and offers several tools for finding the data.
The NCCS interface can be somewhat awkward to use, so if you are comfortable working with large data spreadsheets, you might prefer to use the IRS master files.
GuideStar offers data in a more user-friendly form and limited info about the organizations.
Checking on nonprofits
In addition to the above data sources, several national organizations monitor nonprofits:
Better Business Bureau / Nonprofits, Charity Navigator, and Charity Watch – the American Institute of Philanthropy – all are focused on the largest nonprofits; they do more in-depth assessments following a set of guidelines.
The Economic Research Institute specializes in research on executive salaries at nonprofits.
Check your state’s office for charities for additional information. Standards vary by state, but most states have reporting requirements for charities. The national list of state offices is available at the National Association of State Charity Officials: http://www.nasconet.org/documents/u-s-charity-offices/
An excellent, comprehensive guide to reading a 990 form is offered by the Nonprofit Coordinating Committee of New York in its Information Databank: http://www.npccny.org/new990/new990.htm
The IRS instructions for completing the form are here: http://www.irs.gov/pub/irs-pdf/i990.pdf
For background about nonprofits nationally, legal issues, and their policy stands, check out these sources:
IRS Publication 557 is the complete manual for nonprofits to earn and retain tax-exempt status: http://www.irs.gov/publications/p557/index.html
The Foundation Center offers statistics and information about grantmakers as well as reports about trends and issues.
National Council of Nonprofits and its state affiliates is the advocacy group for nonprofit issues, and offers policy papers as well as sources on issues related to nonprofits.
National Center for Charitable Statistics has a large collection of FAQs about all the basics regarding how nonprofits operate.
Nonprofit Quarterly publishes a magazine and has a newswire.
More story tips about nonprofits can be seen here: http://www.nearmediallc.com/reporting/category/nonprofit/