Building the Resource Base on the Independent Sector

A major stumbling block to stimulating social science research on the independent sector has been the lack of regular data collection on institutions, their programs, functions, and finances; on employment and occupations in these institutions; and on giving, volunteering, and the motivations for individuals who give and volunteer. As The Nonprofit Handbook, edited by Walter Powell of Yale University, clearly shows, many talented social scientists have developed definitions and theories about the role and functions of the sector, but there are few large-scale empirical studies to test these theories. In fact, an even more formidable stumbling block than lack of data is the lack of a common language with which to describe, chart, and understand this sector of American society. In order to address the enormity of these issues, several strategies were developed to provide social scientists with a better resource base and to provide them with access to statistical studies as they became available. Three major strategies were developed to address these issues: (1) the reviewing of what information was available and identifying major information gaps; (2) the development of the National Center for Charitable Statistics to improve the collection and reporting of data from federal, state, and private sources; and (3) the sponsoring or encouraging of surveys in areas where information was not collected. The decision of the Research Committee was that the development of basic resources needed more direct effort and a clear agenda.

A REVIEW OF CURRENT INFORMATION: SETTING THE AGENDA

Dimensions of the Independent Sector: A Statistical Profile is a biennial publication (first published by Independent Sector in 1984) that synthesizes completed statistical research on the sector. It provides a framework to measure the size, scope, and dimensions of this sector from various data collections and national surveys. As such, it serves as a useful reference book that summarizes what we know, as well as outlining the gaps in our knowledge about the sector. The publication in its current form became possible because baseline research on employment and earnings done by Gabriel Rudney and Murray Weitzman for PONPO at Yale University (1983). That research allowed for the development of a framework for measuring the size of the nonprofit sector as part of the American economy. Many of the information gaps noted in the first edition of Dimensions are now being addressed, including: (1) more information on giving and volunteering by individuals; (2) a survey of religious institutions; (3) the creation of a national sample to chart the finances of nonprofit institutions and foundations; (4) the development of a national classification system; and (5) a change on the 1990 Census to allow people to report whether they are employed at a nonprofit organization. The 1986 edition of Dimensions charted this current progress and reported on the new studies that occurred between 1982 and 1985.

THE NATIONAL CENTER FOR CHARITABLE STATISTICS

The National Center for Charitable Statistics (NCCS), started as a special program of the National Charities Information Bureau in 1980. It was incorporated in 1982 as 501(c)(3) organization under the sponsorship of the Council on Foundations, Independent Sector, the National Charities Information Bureau, and the United Way of America. In 1983 the management of NCCS was moved to Independent Sector and in 1986, at the request of the NCCS Board and with the approval of the IS Board, NCCS became a program of Independent Sector.

The NCCS program is a unique commitment to track the scope of the charitable sector in the country through a continuing effort to improve and expand the reporting of statistics on charitable organizations by both federal and state governments and to make these statistics publicly available. It also stimulates the collection of statistics on giving and volunteering through private research efforts. It serves as a national repository of those statistics. It provides access to these statistics through the sale of computer tapes, the provision of computer runs, and occasional publications.

The core activities of NCCS are: (1) improving the collection of statistics by the federal government on charitable organizations; (2) assisting and encouraging states to computerize the data on the 990 forms; (3) developing and implementing a national classification system on the nonprofit sector; (4) serving as a national repository, both historical and current, of statistics on computer tapes relating to charitable organizations; and (5) publishing periodic reports on statistics of the sector.

Improving the Reporting of Statistics by the Federal Government. In 1980, NCCS secured the agreement from the states and the federal government to use a single 990 form. Not only was this accomplishment important for charitable organizations to reduce the cost and effort of separate reports, but it gave us a base for a national database on the nonprofit sector. The NCCS now is working with states to agree on a single state supplementary form for the 990's.

In 1983, NCCS also commenced its work with both the U.S. Department of Treasury, the Internal Revenue Service, and the U.S. Bureau of the Census to improve its reporting on nonprofit organizations. NCCS also tried to convince IRS to code more than the name, address, and total revenues and assets on the 990 master file. While carrying out these activities, NCCS started to check more thoroughly about how accurately even those two numbers were coded on the master file. In 1985, NCCS noticed that the 1983-1984 IRS master file of 990 forms for 501 (c)(3) and 501 (c)(4) organizations had massive errors. We asked the IRS to investigate. The IRS appointed a task force from the Statistics of Income (SOI) Division to investigate the problems. The SOI team found that the data recorded on the 990 tapes had massive error problems due to the coding errors in the IRS regional centers. At the request of NCCS, the IRS agreed to develop a system to eliminate these coding errors which they estimate will take two to three years. In the meantime, at the request of NCCS they have removed the master file tapes from public use. This is the only universal database on charitable organizations that file tax returns, but we are providing public support for this effort to assure more accurate reporting by the federal government in 1988 and beyond. The task to persuade them to increase the items it codes from those forms will still be with us, but we hope to generate more public support in the interim for these efforts.

During this period, the SOI Division launched a program to collect annual samples of private foundations and tax-exempt organizations. The last time such a national sample was collected was in 1975, which directly resulted from the efforts of the Filer Commission. In the fall of 1985, SOI started the collection of these samples from the 1982-1983 year. For the first time, it looked like the charitable sector was to have a longitudinal database.

However, in the spring of 1985, the SOI received a 25% budget cut for Fiscal Year 1986. Because these samples were not mandated by federal legislation, future collections would be cut. Fritz Scheuren, Director of SOI, asked NCCS to go into partnership to save these samples. NCCS called a meeting of executives from government agencies, foundations, and corporations to discuss this issue. It meant raising $125,000 a year for two or possibly three years to provide the 25% cut needed to save these samples. By December 1985, NCCS raised $250,000 to save the samples for 1986 and 1987.

By going into a contractual relationship with the SOI, NCCS will be able to implement its national classification system on these samples. It has been able to save the only longitudinal database on financial statistics of foundation and charitable organizations because the Statistics of Income Division currently plans to conduct enlarged samples of all nonprofit organizations annually starting in 1989.

The Development of a National Classification System for the Nonprofit Sector. One of the stumbling blocks to stimulating social science research even if sufficient government information were available was the lack of a way to classify nonprofit, tax-exempt organizations by purpose. Nor was there a common language to accurately define and describe the voluntary sector in the United States.

In 1982, the National Center for Charitable Statistics realized that the development of such a system was a first priority in order to improve research and data collection on this sector. It appointed a National Classification Task Force chaired by Elizabeth Boris, vice president for research at the Council on Foundations, to design a plan to develop such a system for the nonprofit sector. After several meetings, the Task Force recommended that Russy D. Sumariwalla, Senior Fellow of the United Way Institute, direct the project. In 1987, after extensive pilot testing in several hundred national non­profit organizations, the National Taxonomy of Exempt Entities was released.

Soon after its release, NCCS, in collaboration with the IRS, developed a plan for its implementation by 1990. NCCS will classify 900,000 nonprofit organizations on the IRS Master File of Exempt Entities, and the IRS will classify new organizations and revise its systems to accommodate the new system by 1990. When the classification system has been implemented, social scientists studying the nonprofit sector will begin to have the kinds of analytical tools that have been available to them for the stalemated study of business and government since the 1930s, when the Standard Industrial Code was created.

The States Computerization Project. NCCS launched its states computerization project in 1981 in an effort to record more data from the 990 forms. Bill Levis of the National Charities Information Bureau staffed this effort until 1985. Currently, Frank Swenson, former head of the Charities Registration Office in New Jersey, directs this effort. The states computerization included development of a software package for use by states, technical assistance to the states during the computerization, and, in some states, assistance with raising funds for hardware among local donor organizations.

By the end of 1986, five states were fully computerized: New York, California, Minnesota, New Jersey, and Connecticut. Partial computerization of the 990 forms have been completed in Nevada, Illinois, Indiana, Maryland, New Hampshire, and Connecticut. Partial or full computerization is in progress in Virginia, Massachusetts, and Pennsylvania. We are currently working with North Carolina, Texas, and Wisconsin to start state computerization efforts there.

NCCS is unique in its effort to serve as a national repository for statistics on the nonprofit sector. These statistics come from both public and private sources. NCCS collects both federal and states tapes on the 990 forms. It also encourages funders to donate the tapes of major private surveys to the Center. Currently, the tapes of the first SOI sample of private foundations and tax-exempt organizations are housed at NCCS. The Rockefeller Brothers Fund donated the tape from the Yankelovich, Skelly and White national survey of the Charitable Behavior of Americans to NCCS, and the Americans Volunteer 1985 conducted by the Gallup Organization and commissioned by the IS research program will be available through NCCS. The Urban Institute will also donate the tapes of its survey from the Nonprofit Sector Project after the research has been completed and the findings disseminated.

Efforts are being made to get copies of major earlier studies to complete the library. The purpose of the repository is to provide a single tape library to house these studies. In the past, master 990 files were destroyed after a year and are no longer available to the public. Former research files from the Filer Commission still are in the hands of individual researchers and NCCS is trying to get copies of these older tapes.

Without such a repository to serve the sector, it is extremely difficult and costly for social scientists to consider conducting research on this sector. Therefore, as the years pass, NCCS will serve as a national computer library for the nonprofit sector.

To Provide Data Services to Organizations. One of NCCS's major functions in the years ahead will be to provide computer tabulations for a variety of purposes to organizations and researchers. Until this year, NCCS has been limited to providing mailing labels and occasional samples for researchers. However, once the classification system is in place, and with the new tapes from the SOI studies, and the giving and volunteering surveys, NCCS will have a rich repository of information for researchers.

To Publish Periodic Reports of Statistics on the Sector. In 1985, NCCS published Non-Profit Service Organizations: 1982, discussed earlier. In 1987, NCCS published a series of state directories on the finances of nonprofit organizations in New York, New Jersey, Minnesota, California, and Connecticut.

NCCS believes in the critical importance of the development of an information system for the whole nonprofit sector. Its striving to secure more and better information on the charitable represents a major endeavor to build a national repository to provide statistics on the sector. If all the 990 forms in the states with reporting requirements and the federal government are computerized using the NCCS classification system, the sector and the public in general will finally have a common language with which to define, chart, describe, and understand this neglected sector of American society. These data can be used for social science research, reports on financial trends of various organizations, public information, public policy research, and the development of financial indicators for use by managers of nonprofit organizations. The NCCS Program Plan constitutes a major effort toward meeting those information needs and filling the statistical void on charitable organizations.