We’ve talked on this blog in the past about the value of the IRS Form 990 in cracking the wall of silence at private colleges (and at the nonprofit “auxiliary” affiliates of public colleges, too). But there’s a less-well-known way to use federal tax forms to check on what colleges are up to.
Any good-sized college will belong to a multitude of nonprofit organizations, and each of those organizations also must file — and must make publicly availably — an annual tax return with details of its revenues and expenses. It is a terrific slow-news-day exercise for college journalists to flip through the Form 990 reports of these nonprofit membership organizations.
(Reports are available on request from the nonprofit entity, but often are more quickly accessible by starting a free account on the website of Guidestar, a clearinghouse for information about nonprofits.)
Using the IRS forms for athletic conferences, you can see how much money your conference is receiving in television contract revenues, what it spends on athlete drug testing, how payments to your college stack up against payments to other conference members — and much, much more.
It’s almost impossible to read a Form 990 report and not get a story idea. For instance, USA Today sports reporters have mined IRS tax forms to reveal the blockbuster compensation packages — some approaching $2 million a year — paid to commissioners of the Pac-12, Big 12 and other collegiate sports leagues.
And then there’s the granddaddy — the NCAA itself. While the sports governing body is notoriously secretive, even it can’t hide from the IRS. Its most recently available IRS form shows that the NCAA made more than $740 million in revenues (mostly, by far, from television contracts), employs nearly 600 people, spends $190,000 a year on lobbying, and pays its CEO a compensation package exceeding $1.76 million.
Virtually any organization that your college belongs to — the American Council on Education, the American Association of State Colleges and Universities, and so many more — will be incorporated as a not-for-profit under federal tax laws. And that means each must allow the public to scrutinize its financial condition and make sure that tax-exempt resources are being spent to serve a public purpose.
Remember that IRS reports should be the start of a careful reporter’s digging and not the end. If a statistic looks hokey, take it back to the source before you publish, as there occasionally are innocent explanations for suspicious figures — and an extra phone call in advance may avert an embarrassing clarification or correction.