Information for Impact

Information for Impact: Liberating Nonprofit Sector Data,” a report by Beth Simone Noveck and Daniel L. Goroff for the Aspen Institute’s Program on Philanthropy and Social Innovation (PSI) was officially released on January 31 at the “How ‘Big Data’ on the Nonprofit Sector can Spur Innovation, Knowledge, and Accountability” event in Washington DC.

In the report, Noveck (NYU) and Goroff (Sloan Foundation) argue that the IRS Form 990—which includes information on nonprofits’ basic finances, mission details, activities and organizational and governance structure—should be released in an open, “computable” form. Noveck calls for “liberating 990 data” in her blog entry on the report.  If Form 990 data is opened, potentially valuable information on 1.5 million registered tax-exempt organizations in a sector that pays $670 billion in wages and benefits would be made public. They argue that, “in principle, the best way to provide more information about the nonprofit sector could be to work with the data federal and state governments already collect from nonprofits.”

As it stands, Form 990 data is public—“the IRS creates image files of Form 990 returns and sells compilations of them to the subscribing public for a fee.” Noveck and Goroff argue:

“Like other important data collected by governments, information contained in the 990s could potentially be far more useful it were not only public but ‘open’ data…Making the Form 990 data truly open…would not only make it easier to use for the organizations that already process it, but would also make it useful to researchers, advocates, entrepreneurs, technologists, and nonprofits that do not have the resources to use the data in its current form.”

Consistent with arguments for open data in government, the researchers argue that making nonprofit data open through the wide release of Form 990 data would serve to both increase the sector’s transparency by introducing public scrutiny and unlocking new innovations and insights through the efforts of third parties that did not previously have access to the data. So in addition to the obvious benefit of “making it easier for state and federal authorities to detect fraud” in nonprofits, open data in the nonprofit sector could be transformative through the creation of “new analyses, visualizations, and mash ups that transform raw data into knowledge.” Tapping third party innovators is essential, they argue, because:

“Solving complex challenges requires many people with diverse skills and talents working together. When experts of all kinds have access to open data, it becomes a catalyst for creative problem solving and community innovation.”

The researchers go on to list a number of new capabilities that would be possible with the creation of a comprehensive Form 990 open data resource:

  • Do more extensive, in-depth empirical research on the sector as a whole, including sector-wide issues such as the impact of the economic downturn on nonprofits, the geographic distribution of nonprofit services, and the efficiency of the nonprofit sector in delivering services;
  • Combine the 990 data with other datasets, such as those on government spending, to better understand the relationship between public and private dollars in providing social services;
  • Query the data to address issues relating to specific nonprofits, such as gaining greater insight into 501(c)(4) organizations that engage in lobbying or finding trends and outliers in executive compensation;
  • Recognize fraud early, anticipate abuses, and target enforcement more efficiently and effectively;
  • Enable more people and organizations to analyze, visualize, and mash up the data, creating a large public community that is interested in the nonprofit sector and can collaborate to find ways to improve it; and
  • Spot issues of both data currency and data quality, and evaluate their impact on our understanding of the sector.

The report explores four potential avenues for creating an open data system for 990 data: a legislative mandate, an IRS initiative, a third-party platform and an a priori electronic filing system. After studying the advantages and disadvantages of each, they determine that a two-track strategy would be best. This strategy would pursue “the longer-term goal of legislation that would mandate electronic filing to create open 990 data,” as well as “a shorter-term strategy of developing a third-party platform that can demonstrate benefits more immediately.”

The Aspen Institute event (see previous blog entry) introducing the report featured a panel discussion, moderated by Jane Wales, vice president of Philanthropy and Society at the Aspen Institute, with Jonathan Greenblatt, special assistant to President Obama and director of the White House Office of Social Innovation and Civic Participation; Cindy Lott, senior counsel of the National State Attorneys General Program; Darin McKeever, deputy director at the Bill and Melinda Gates Foundation; and Stacy Palmer, editor of The Chronicle of Philanthropy.

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