Information, Please? A Dearth of Data Hides Nonprofit World’s Impact

When President Obama took office a year ago, he knew full well that government could not solve our nation’s problems by itself. Nonprofit groups and foundations working in communities throughout the country would be central to devising and carrying out lasting solutions.

But today, as government leaders reach out to nonprofit groups, many of them will find themselves hampered by a lack of up-to-date information. Basic information on the country’s 1.2 million charitable organizations is often inaccessible, buried deep in our nation’s data systems.

Try getting an update on the number or total wages of nonprofit employees in the United States, for example. Want to know where nonprofit groups are located and where the gaps in services are? And what about nonprofit finances: What is happening to nonprofit revenue, and what are the trends in nonprofit spending?

Sorry, but most of the information, if available at all, is two years old or more. That’s way too late to deal with problems as they arise or to send a signal to policy makers and nonprofit leaders that new challenges are emerging.

Even information on federal money that goes to support delivery of nonprofit services—information that must be reported under the Federal Funding Accountability and Transparency Act of 2006—has thus far been disappointing.

The Transparency Act created a new Web site, http://www.USAspending.gov, that tracks federal spending on a regular basis. Thankfully, the site includes information on nonprofit organizations and will eventually report on some of the federal money that is channeled to nonprofit groups through other entities, such as state governments.

Despite those advances, serious concerns have been raised about the accuracy of federal spending figures for nonprofit groups.

A General Accountability Office study released last year found that “due to limitations and reliability concerns with tracking systems’ data, the data presently collected provide an incomplete, unreliable picture of the federal government’s funds reaching the nonprofit sector through various mechanisms, although they suggest these funds were significant.”

In addition, while reporting on the pass-through money is a major step forward, the Office of Management and Budget indicated in June that such reporting would likely be limited and thus won’t be as helpful to nonprofit groups as it could be.

And the American Recovery and Reinvestment Act, which requires unprecedented levels of transparency and accountability for every dollar of stimulus money spent, does not seem to be improving the situation from the nonprofit perspective. While a new Web site, http://www.recovery.gov, tracks dollars to each beneficiary, grants to nonprofit groups as a whole are not being tracked separately, thus obscuring the charity world’s role in helping the nation recover from the recession.

The federal government, which relies heavily on nonprofit groups to deliver much-needed services, often renders charitable organizations virtually invisible in its collection and publication of data, or has problems getting the data right.

That is despite the fact that nonprofit groups have become a major economic force in the United States, with a work force that is larger than the construction industry and larger than the real-estate industry and finance and insurance businesses combined.

Some experts might argue that the nonprofit world is so varied and contains so many disparate groups—such as colleges, hospitals, museums, homeless shelters, international-aid providers—that tracking charitable institutions in a single way would be of little use.

But without solid information on the size and scope of nonprofit activity, how can nonprofit leaders fully understand the needs and capabilities of their organizations to work together to solve problems, plan for the future, develop full-scale analyses, coordinate services, and advocate for their constituencies and themselves?

Similarly, shouldn’t any new public policies that government leaders devise be informed by solid data, so that its consequences are understood?

Clearly high-quality, timely, accessible data are critical to sound policy making, effective delivery of services, and informed advocacy.

Fortunately, while unearthing statistics from our nation’s data systems will not be easy, it is not a matter of starting from scratch. The federal government already collects reams of data on nonprofit organizations, it just often fails to take the extra step to break down or categorize this information in a way that would be useful.

The U.S. Bureau of Labor Statistics, for example, collects wage and employment information on almost every employer in the nation and releases this information regularly. Even though nonprofit groups participate in this data collection, they are not categorized separately for reporting purposes so information on the nonprofit industry is not generally released.

It is possible, however, to unlock this information by taking the extra step of matching the Bureau of Labor Statistics information with the IRS business master file of tax-exempt organizations to generate wage and employment information on the nonprofit world as a whole. This process could produce a treasure trove of timely data.

Similar steps could be taken with data on federal aid that flows to charities to get a much more accurate picture of nonprofit groups’ role in the economy.

In fact, other federal databases contain information on nonprofit groups yet fail to reveal this information or do so in ways that could be vastly improved in terms of transparency, accessibility, and accuracy.

Providing such data would probably produce a variety of benefits, including more robust research about nonprofit issues and greater attention to the important role of nonprofit organizations in our society.

As Jon Pratt, executive director of the Minnesota Council of Nonprofits, recently noted in an article, “When industries succeed in getting the federal government to devote IRS, Labor, or Commerce attention to generating databases, the result is definitional profile and importance.”

Today, we have a great opportunity to improve the quality, transparency, and accessibility of nonprofit data. This opportunity is being generated both from the bottom up—public interest in ensuring that federal stimulus dollars have been well spent—as well as the top down—an administration that, among other things, has appointed the nation’s first-ever federal chief information officer, Vivek Kundra, whose job is to create a more efficient, effective, and open federal information-management system.

Building on those developments, the Aspen Institute’s Program on Philanthropy and Social Innovation has started the Nonprofit Public Information Project, with money from the Charles Stewart Mott Foundation.

This effort works with some of the nation’s leading nonprofit data providers, including the Foundation Center, GuideStar, the Johns Hopkins University, Indiana University, and the Urban Institute, to provide a forumfor dialogue on nonprofit data needs, gather information on data problems, and work with researchers and government officials to identify solutions.

As this project makes headway, we hope to expand the ranks of advocates for nonprofit data.

Nonprofit organizations, working with government and business, are vital to building up our communities and are first in line when disaster strikes them down. When asked, “How are nonprofit groups doing?” shouldn’t we have an answer?