Bradley M. Kuhn

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IRS Tax-Exempt Status & FaiF 0x4E

Friday 26 September 2014 by Bradley M. Kuhn

Historically, I used to write a blog post for each episode of the audcast, Free as in Freedom that Karen Sandler and I released. However, since I currently do my work on FaiF exclusively as a volunteer, I often found it difficult to budget time for a blog post about each show.

However, enough happened in between when Karen and I recorded FaiF 0x4E and when it was released earlier this week that I thought I'd comment on those events.

First, with regard to the direct content of the show, I've added some detail in the 0x4E show notes about additional research I did about various other non-software-related non-profit organizations that I mention in the show.

The primary thrust of Karen's and my discussion on the show, though, regarded how the IRS is (somewhat strangely) the regulatory body for various types of organizational statuses, and that our legislation lumps many disparate activities together under the term “non-profit organizations” in the USA. The types of these available, outlined in 26 USC§501(c), vary greatly in what they do, and in what the IRS intends for them to do.

Interestingly, a few events occurred in mainstream popular culture since FaiF 0x4E's recording that relate to this subject. First, on John Oliver's Last Week Tonight Episode 18 on 2014-09-21 (skip to 08:30 in the video to see the part I'm commenting on), John actually pulled out a stack of interlocking Form 990s from various related non-profit organizations and walked through some details of misrepresentation to the public regarding the organization's grant-making activities. As an avid reader of Form 990s, I was absolutely elated to see a popular comic pundit actually assign his staff the task of reviewing Form 990s to follow the money. (Although I wish he hadn't wasted the paper to print them out merely to make a sight gag.)

Meanwhile, the failure of just about everyone to engage in such research remains my constant frustration. I'm often amazed that people judge non-profit organizations merely based on a (Stephen-Colbert-style) gut reaction of truthiness rather than researching the budgetary actions of such organizations. Given that tendency, the mandatory IRS public disclosures for all these various non-profits end up almost completely hidden in plain sight.

Granted, you sometimes have to make as many as three clicks, and type the name of the organization twice on Foundation Center's Form 990 finder to find these documents. That's why I started to maintain the FLOSS Foundation gitorious repository of Form 990s of all the orgs related to Open Source and Free Software — hoping that a git cloneable solution would be more appealing to geeks. Yet, it's rare that anyone besides those of us who maintain the repository read these. The only notable exception is Brian Proffitt's interesting article back in March 2012, which made use of FLOSS Foundation Form 990 data. But, AFAIK, that's the only time the media has looked at any FLOSS Foundations' Form 990s.

The final recent story related to non-profits was linked to by Conservancy Board of Directors member, Mike Linksvayer on identi.ca. In the article from Slate Mike references there, Jordan Weissmann points out that the NFL is a 501(c)(6). Weissmann further notes that permission for football to be classified under 501(c)(6) rules seems like pork barrel politics in the first place.

These disparate events — the Tea Party attacks against IRS 501(c)(4) denials, John Oliver's discussion of the Miss America Organization, Weissmann's specific angle in reporting the NFL scandals, and (more parochially) Yorba's 501(c)(3) and OpenStack Foundation's 501(c)(6) application denials — are brief moments of attention on non-profit structures in the USA. In such moments, we're invited to dig deeper and understand what is really going on, using public information that's readily accessible. So, why do so many people use truthiness rather than data to judge the performance and behavior of non-profit organizations? Why do so many funders, grant-makers and donors admit to never even reading the Form 990 of the organizations whom they support and with whom they collaborate? I ask, of course, rhetorically, but I'd be delighted if there is any answer beyond: “because they're lazy”.

Posted on Friday 26 September 2014 at 10:55 by Bradley M. Kuhn.

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