What did new IRS 990 forms get us? Two Cups of Tea?

I’ve been wondering if all the changes the IRS put forth into the 990 forms actually made a difference.  A couple of years ago the IRS changed the 990s in reaction to the scandals and misappropriation of funds that had gone on at various nonprofits.  The changes were designed to make such acts less likely to occur. 

So has it worked?

Well, what were the changes?  Without going into details, they broadly covered a few categories, such as:    

a) a new section on governance, with the idea that good governance would equal good operations.

b) more detailed reporting for the compensation of officers and others affiliated with the organization. To make sure all forms of compensation were being reported.

c) expanded reporting regarding program services and exempted activities, as well as payments made to contractors in excess of $100K.

In all, they sound virtuous.  So how did we get Greg Mortensen’s scandal with “Three Cups of Tea” and the Central Asia Institute?   Did the 990 catch him?

I went back and looked.  The most recent 990 they post is from 2008 (unfortunately) but it’s revealing:

a)      There were only 4 board members.  Wow.  One of them was Greg himself.  Doesn’t look good, does it?

b)      Greg makes $180K in total compensation - a nice living - and not out of line. The head of our local United Way makes a lot more than he does.

c)      Expanded reporting doesn’t really say much…

But Part III says it all.  And Part III is no different than it used to be.  The “Statement of Program Service Accomplishments” clearly indicates that 41% of revenues are spent overseas on programs and 47% are spent on “domestic outreach and education, lectures & guest appearances in the U.S.”  So while Greg may earn a modest sum, the nonprofit is supporting the sales of his book, his lecturing, and the promotion of his book and cause in the U.S.

Since 91% of his funding, per the institute’s website, comes from individual donors, I bet they’d find this interesting. 

Not to take away from Greg – it appears that his organization is helping to educate 13,630 young students – boys and girls - in Pakistan and 28,475 students in Afghanistan.  He is certainly to be commended for this.  The list of schools is impressive.   

I’m  just thinking his funders might like to see the pie chart divided a little differently – with 47% (or more) of funds going to programs overseas – and even less than 40% going to promote the cause in the U.S.

So what has the new 990 done?  Not much that I can see.   It was the people within the organization, as well as some outsiders who were watching the reporting, who blew the whistle on Mr. Mortensen.  I don’t think the change in reporting did it…the old forms would have told this story just as well as the new ones do.

I’d like to see if the 990s are really ending corruption.  I doubt it.  It’s just being reformatted – for the astute to go and find.  Let me know if you see a difference somewhere that I’m missing.