Thad Daniel Calabrese

Despite the importance of Internal Revenue Service (IRS) Form 990 to exempt organizations’ regulation, management, and accountability, scholars and practitioners have overlooked how the form evolved over time. This study uses public comments, submitted during the most recent revision of the form in 2007, to examine who participated, stakeholder priorities, and how the updated form was shaped by the federal rulemaking process. The study finds that (a) the submitters of public comments provide a comprehensive view of the nonprofit sector’s diverse set of stakeholders and (b) the public comments highlight substantive self-identified priorities for the sector that can serve as a guide to future research. Key takeaways include the need to consider for-profit and trade association influence in nonprofit policy formation, to recognize selective transparency in reporting requirements, and to understand how stakeholder interests shape regulatory outcomes. Implications suggest researchers should fully leverage Form 990’s extensive changes while remaining cognizant of information gaps.

Current public policy grants nonprofits property tax exemptions simply because of their status, often assuming they are “charitable,” “educational,” or “health‐related.” This research note argues exemptions should be based on the public or private benefits provided, and not be given to all nonprofits. According to benefits theory, public funds should not finance private benefits; beneficiaries should cover those costs. Property tax exemptions should be reserved for organizations offering public goods or services. In New York City, these exemptions are costly, yet only a small portion supports nonprofits that produce public goods or services.

Accounting rules vary in terms of the discretion afforded to organizations - while some rules prescribe a specific treatment, others allow managers to choose one among many alternatives. Where there are alternatives, nonprofit managers must make choices. Managers in nonprofit organizations may use accounting choice to convey a misleadingly positive or negative image of the organization’s financial health. The scope of accounting choice includes the basis of accounting used in reporting financial information, the allocation of joint costs between program and overhead expenses, estimates and assumptions used in specific financial accounts and accruals, strategically altering actual spending decisions, accounting for business combinations, inventory valuation, and depreciation, among others. This chapter details the motivations underlying these choices, discusses the current literature on the topic including the key takeaways, and offers future directions for researchers interested in further exploring the topic of accounting choice in nonprofit organizations.

Increased electronic filing, or e-filing, of nonprofit data in the United States and abroad quickens public availability, eliminates dependence on third-party proprietary datasets, and broadens access to information offering insight into previously neglected topics. On the other hand, increasingly open data require researchers to independently ensure data quality, understand limitations, and consider how data availability shapes research questions. As electronic filing becomes mandatory in the United States and more widespread elsewhere, this research considers how expanded e-filer data impact nonprofit research approaches and opportunities while assessing the generalizability and limits of existing e-filed data in the United States. While the data suggest increasing compliance with e-filing, analyses show that older nonprofits with greater capacity and sophisticated financial characteristics are historically more likely to e-file. Further, particular subsectors are more likely to e-file than others. Therefore, using existing e-filed IRS Form 990s for panel data analysis presents some generalizability concerns, although this will improve over time. Moving forward, e-filing and machine-readable access requirements bode well for both quantitative and qualitative nonprofit research, while the United States’ experience provides helpful lessons for other research settings.

This article asks what distribution behavior of private foundations in the United States reveals about their motivations and strategy. Do private foundations intentionally distribute additional money to grantees to help them manage through business cycles and maintain services during economic downturns? Such behavior would be consistent with revealed publicness with respect to distributions. Do they retrench during difficult economic times to protect their endowments? Or do they simply distribute money independent from the larger economy? The current study considers these conflicting expectations, and empirically tests whether private foundation distributions vary with endowment returns and the larger economy as suggested by competing theories. Using administrative data filed with the Internal Revenue Service, fixed effects regression models indicate that private foundations change distributions in a manner consistent with retrenchment or independently from the larger economy, depending on the sample used. The results do not support the notion that private foundations act with prosocial-countercyclical motivations about distributions—in which more money is distributed during economic downturns—despite their receiving significant public subsidies.

In 2003, the FASB issued an accounting standard (132R) requiring defined-benefit pension plan sponsors to disclose in the notes the asset allocations of their sponsored pension plans. A motivation for this requirement was to help users evaluate a plan's expected rate of return (ERR) assumption which is supposed to be determined by the allocation of plan assets to risky investments. All else being equal, the higher the assumption, the lower the pension expense and the higher the reported profits of plan sponsors. We hypothesize that not-for-profits used the ERR to inflate their earnings by reducing pension expenses. Using a dataset of audited financial statements and a difference-in-differences design, we find that not-for-profits significantly decreased their ERRs post-SFAS 132R. The results suggest that opportunistic actuarial assumptions by not-for-profits were reduced following the implementation of SFAS 132R. JEL Classifications: J32; L31; L38; M41.

Participatory budgeting is described as a direct-democracy approach to resource allocation decision making. Theories assume it changes how public resources are spent by moving decisions from elected officials to citizens. The literature does not consider how earmarking—in which legislators direct parts of public budgets directly—might affect the impact of such policy devices. New York City’s participatory budgeting process which uses earmarks is analyzed to determine spending changes. Officials involved fund more projects at lower average amounts than those not involved but do not change the areas of funding, all of which is expected in systems of budgetary earmarks controlled by legislators.