Financial disclosure: Part 5

By Todd Cohen

Moving to even greater financial disclosure is a focus of the Senate Finance Committee, which is looking at sweeping changes in the regulation of nonprofits.

The committee staff, for example, has recommended that Form 990s include information about a nonprofit’s performance, not simply finances.

While disclosing performance is important in fundraising because it shows donors their gift made a difference, Form 990 is “not the appropriate place for that,” says Paulette Maehara, president and CEO of the Association of Fundraising Professionals.

“Doing it through websites or annual reports is a much better place to show how your organization has made a difference in the community,” she says

Bob Ottenhoff, president and CEO of GuideStar, agrees.

While Form 990 “in and of itself does not give a complete picture of an organization,” he says, disclosing performance is “part of what an organization voluntarily should supply.”

Jan Masaoka, executive director of CompassPoint, a nonprofit consulting firm in San Francisco and San Jose, says she favors changing the law to require that Form 990s be filed by all charities with more than $25,000 a year income, including religious congregations.

She also would like to see the IRS publish all 990s, rather than having the function GuideStar serves borne by private funding.

“It’s a government form,” she says. “It’s about public access.”

Jason Saul, CEO of B2P Commerce, a Chicago firm that works with funders to help them measure the impact of their grants, says nonprofits should not fear the proposal by the staff of the Senate Finance Committee to require disclosure of performance.

“They should not see this as a threat but rather as an opportunity to make more information public to donors about the good work their organization is doing,” he says.

“You have to be in position to convince them you are the most effective organization at solving the problems they care about,” he says. “Nonprofits are concerned that donors are looking at the wrong ratios to judge their effectiveness,” he says. “Here’s an opportunity where they can actually set the record straight.

Other stories in the series:

Part 1: Nonprofits adapt to donor demand, technology change
Part 2: Disclosure data online all the time 

Part 3: Nonprofits increasingly are sharing data. 
Part 4: Readily available data changing practice of philanthropy.

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