The Data That’s Hiding in Plain Sight

Beth Noveck in Governing: “What makes open data a powerful tool for governing better is the ability of people inside and outside of institutions to use the same data to create effective policies and useful tools, visualizations, maps and apps. Open data also can provide the raw material to convene informed conversations about what’s broken and the empirical foundation for developing solutions. But to realize its potential, the data needs to be truly open: not only universally and readily accessible but also structured for usability and computability.

One area where open data has the potential to make a real difference — and where some of its current limitations are all too apparent — is in state-level regulation of nonprofits. In May, a task force comprising the Federal Trade Commission together with 58 agencies from all 50 states and the District of Columbia filed a lawsuit against the Cancer Fund group of nonprofits and the individuals who run them. The complaint alleges that the groups are sham charities that spend “the overwhelming majority of donated funds supporting the Individual Defendants, their families and friends, and their fundraisers.” State officials spotted telltale signs of abuse and fraud by studying information the organizations had submitted in their federal nonprofit tax returns and state-by-state registration forms.

Nonprofit tax returns and registration forms are the public’s (and government’s) primary window into the workings of America’s enormous and economically impactful nonprofit sector. Every year in the United States, approximately 1.5 million registered tax-exempt organizations file a version of the federal Form 990, the tax return for tax-exempt organization, with the Internal Revenue Service and state tax authorities. These forms collect details on the organizations’ financial, governance and organizational structure to the end of ensuring that they are deserving of their tax-exempt status. All but 10 states also require that nonprofits file state-specific registration forms. The information these filings contain about executive compensation, fundraising expenses and donation activities can help regulators spot possible bad actors and alert each other to targets for further investigation.

Yet despite the richness and utility of the information contained in these filings, major barriers prevent regulators from efficiently sharing and analyzing the data..(More)”