Today, the IRS Form 990 tax filing is the principal
annual disclosure mechanism of nonprofit organizations. Over time,
considerable thought has been put into finding ways to improve
access and use of the 990 form, with only scant attention focused
on whether the 990 is the right data source on which to build
a system of nonprofit accountability. This paper takes a broader
perspective, assessing not only the quality of the financial data
and its availability, but also the entire financial reporting
model. The paper begins with a framework for thinking about organizational
accountability. It then examines the current structure of nonprofit
financial reporting and contrasts it with alternative systems
developed for publicly traded firms and credit unions. The paper
concludes with recommendations for improving nonprofit accountability
by reengineering the reporting and oversight systems in the sector.
Elizabeth K. Keating, Kellogg
Graduate School of Management, Northwestern University
Peter Frumkin, Kennedy School of Government, Harvard University
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