A bill that passed the House of Representatives this week, the (HR 5443) would require electronic filing of nonprofit tax returns and make those forms available to the public in a machine-readable, searchable format.
The measure grew out of work by The Aspen Institute’s Nonprofit Data Project, an effort to improve nonprofit information and transparency, in partnership with GuideStar, Urban Institute, Lilly Family School of Philanthropy, Foundation Center and Johns Hopkins Center for Civil Society Studies. It would enable the public to use IRS Form 990 data for research, fraud reduction, informed charitable giving and other purposes, according to a statement from The Aspen Institute. In committee markup of the bill last week, Rep. John Lewis (D-GA) described it as “sound and good policy.”
IRS Form 990s contain information on the missions, governance and finances of nonprofit organizations. Until recently, they were only available as non-searchable images, greatly limiting their potential. This system led the Nonprofit Data Project to issue the report, Information for Impact: Liberating Nonprofit Sector Data, in 2013. Funded by the Bill & Melinda Gates Foundation, the report detailed the benefits of open data, such as increased transparency, improved speed and accuracy, and new opportunities for nonprofit innovation. In June 2016, electronically filed Form 990s were released as open data by the IRS on Amazon Web Services. Approximately 60% of the forms are electronically filed and available through this service.
The bill now moves to the Senate, and if passed, would go into effect the tax year after the law’s enactment.