IRS Gold Mine: Information On Nonprofits p.22

By: Kelvin Childs Digging up the facts on errant charities, hospitals
FEW PEOPLE REGARD the Internal Revenue Service as helpful, but one of its requirements ? that nonprofit organizations
disclose their finances ? provides enterprising reporters with a great place to dig for stories.
So says Curt Guyette, a reporter for Detroit's Metro Times. Guyette discovered Form 990 ? required of tax-exempt organizations ? about five years into his career, and stories he wrote since have won him three awards in two years from the Association of Alternative Newsweeklies, which held its 21st annual convention last month, in Washington, D.C.
Nonprofit organizations must file 990s with the IRS each year to detail revenues, expenses and assets.
The forms disclose who received grants and list names, salaries and compensation of top executives. And they offer limited information on any for-profit subsidiaries the nonprofit owns.
"They seem to be like a gold mine of little nuggets of information," Guyette said.
And, by law, any citizen has the right to go to a nonprofit and inspect 990s for the past three years. Some post the forms on Web pages.
If organizations resist, claiming that it is against their policy to show the forms, inform them that the law prevails, Guyette advised.
If they still refuse, notify the IRS, which has
the power to fine nonprofits for failing to
comply.
Because nonprofits aren't required to
provide copies, Guyette suggested bringing a blank form along and copying from the original. (Forms are available on the IRS Web site at www.irs.ustreas.gov/prod).
With the 990s in hand, he said, look for:
u Who provides funds to the nonprofit.
u Who are the founders listed in the incorporation papers.
u Who receives grants from the nonprofit.
u Who has contracts with the nonprofit.
The 990 information can spin several stories. For example, after identifying a nonprofit's founders or board members, examine 990s of organizations that received grants.
Or, look to see with whom the nonprofit has contracts. If it has contracts with government agencies, a Freedom of Information Act request might be the next step.
For example, Guyette said he developed a story about a Detroit hospital that fired a doctor who criticized a lack of raises for workers. The doctor waged a media campaign in protest.
With the 990 information, Guyette learned the hospital's top administrators got 40% salary increases while the hospital argued that it couldn't afford 3% raises for janitors.
He also learned that the hospital operated for-profit subsidiaries, including a malpractice insurance company based in Barbados, and was shifting costs from one to the other to make its income appear smaller.
Guyette also said the hospital had reduced its amount of charitable works from year to year, while listing an increasing share of uncollectable debts under that category. Hospital representatives said the debts were listed as charitable works because they were medical services given to indigent patients.
"You can show them the document and say, 'It's black and white,' and they say, 'No, it's red and green!'" Guyette said, suggesting reporters map out everything in their story, "and let the readers see what liars they are."
Another place to get 990s is from the state attorney general's office or the state agency that regulates nonprofits.
Not all states regulate nonprofits, but many that do require the charities to file the federal form with the state.
States are a good source for the documents because supporting materials, such as audits, often are included, Guyette said. While nonprofits aren't obligated to disclose audits to the public, if they're included in a state's public records, they're public.
The 990s also are available from the IRS itself, but it can take up to a year and a half to get them, so it's usually faster to seek access at the non-
profit.
While documents don't guarantee a scandal, they can reveal useful bits of information, like the hospital's malpractice insurance company. He said picketers at the hospital waved copies of the Metro Times, pointing to that reference. "Just being able to say it was [offshore] made it sound sleazy," he said.
Also, comparing records from different sources ? for example, directors of nonprofits vs. directors of the organizations receiving grants ? can turn up interesting ties. Guyette recommended the book Free Ride: The Tax-Exempt Economy, by Gilbert M. Gaul and Neill A. Borowski, as a useful reference.
?(Editor & Publisher Web Site: http: www.mediainfo. com) [caption]
?(Editor & Publisher, July 4, 1998) [Caption]