In a post on EphBlog (my first) on July 20, I recounted briefly how Williams President Shapiro said “No” to my suggestion that Williams  promote greater financial transparency by posting its annual Forms 990 on the college website.  The current post gives the background to the story and, of course, expresses the hope that Williams, under new administration, will “come around” and see the issue from a different perspective.

The Form 990, as data nerds know, is the annual information return filed by the majority of 501(c)(3) nonprofit, “charitable” organizations with the IRS.  Williams and other private colleges are among those organizations.  These forms are to be filed within 4 ½ months after the end of the nonprofit’s fiscal year which, in the case of most educational establishments, is end-June.  In certain circumstances a nonprofit can get up to six months additional time to file, but within at most 10 ½ months after fiscal year end, the 990s should be in hands of the IRS.

It is useful to note that a Form 990 is, by law, a public document.   The filing institution is obliged to make it available on request and/or provide a hard copy at cost, of the most recent three years’ reports.  The IRS will also furnish a copy if contacted using Form 4506-A, Request for Public Inspection or Copy of Exempt or Political Organization, the title of which is, yes, a bit of a mouthful.  For those “in the know,” recent Forms 990 can also be downloaded from (the nom de web of Philanthropic Research, Inc.) and a couple of other sites.  But, there are substantial lags before these documents make it to GuideStar, and in some cases they are not very timely when they get there.  In the case of Williams, it has frequently been a year to a year and half (measured from fiscal year end) before Form 990 filings make it to the GuideStar site.

Now, the Form 990 is the very bread and butter of most evaluations of nonprofit organizations found on the web.  For instance, Charity Navigator, American Institute of Philanthropy, and so forth.  Want to know what data lie behind the AAA, A+, or B- or *** ratings assigned to various charities?  Brother, it’s the Form 990.  There are, to be sure, a few other original data sources on colleges, such as annual surveys by NACUBO  (National Association of College and University Business Officers), based on which endowment ups and downs are sometimes publicized, but these are proprietary and NACUBO will be glad to charge a pretty penny for access to the entire results.  In short, Forms 990 are the Mother Lode of useful, public information about nonprofit organizations.

It turns out that but few private colleges and universities publish, post, or provide a link to, their Form 990 filings on the college websites.   Nor do most of these nonprofit entities provide a link to GuideStar or even confess that their Forms 990s are public documents and can be downloaded from some other site.  Increasingly, I have wondered why.   To be sure, most schools — even Amherst and Wesleyan! —  put up (usually in some obscure corner of their websites) their audited financial reports, but these display much less interesting detail on specific activities of the institution than the 990s; discussion on this subject is deferred to a possible future blog.

Anyhow, in the course of a more than 30-year career as a professional economist with both the Federal Reserve Board and the International Monetary Fund, including considerable work compiling and publishing economic data, I have become quite convinced of the blessings and benefits of transparency in financial statistics, that good old magical power of sunshine on the accounts.  I have slowly morphed into an earnest advocate for the Form 990 and gradually, over time, I also began to realize that  Williams (and other such places) neither posted nor advertised their 990s, so I thought perhaps to do something about this.

Now, as it happens, one of my classmates occupies(ed) a high position in the Development Office, and another has been one of the most enthusiastic class presidents and agents of my cohort, so I thought:   Why not approach these people and let’s do it.   Thus, starting about three years ago there ensued some email and hard copy correspondence reflecting my request that Williams should be more “pro active” in displaying its financial information, by posting/linking/referencing its Form 990s on the College website.   A sample of that correspondence (with a touch of anonymity added) is included here .

Bottom line:  At the end of several cordial exchanges, nothing, nada!  No sign whatsoever that Williams was prepared to move in the (by me) desired direction.  My personal reaction is this indifference is not consistent with our famous motto:   Climb High, Climb Far, and all that.  And I confess this has had some effect on my feelings about my alma mater and my giving behavior, especially as the years dwindle down to those precious few and the word “legacy” crops up ever more frequently in the donation solicitations.

Now, the reasons for this refusal have never been clear to me.   Posting/linking a Form 990 is easy, cheap (indeed free!), and ought to be non-controversial.   I myself run a couple of websites, and it turns out to be “no sweat” to upload things and give them to the world, or that very small subset of the world which happens to consult your site.  So, what’s the reason?   Well, the “standard conjecture” is that the salaries and benefits of certain college officials will be laid bare to prying eyes.  Well, hey, so what?  This is public information in any case.  What is an academic institution, dedicated to truth, justice, and the American way, trying to hide?  In the Form 990s there is also a lot of technical information about income and expense patterns, assets and liabilities of the reporter, and so forth, but this is also public information and, by the way, not a lot different from the detail found in the audited financial accounts that Williams and other schools DO make available on their websites.  (By the way, information reported to the IRS on the Form 990s also is supposed to be from the audited accounts; it is not wild guesses emanating from the Treasurer’s Office.)

Anyhow, to make a lengthening story shorter, in the course of this back and forth (and also with a former colleague or two from the World Bank/Federal Reserve, now enjoying refuge at Williams), I did not take this matter direct to President Shapiro who, by the way, I had never met.  But the fact that Morty is likewise an economist — a fact he mentions in communications to the college community — gave me hope that he might be sympathetic.

The recent 2009 reunion afforded what seemed like a good opportunity to make this case right to the President himself.   Class of ’64, just a touch short of that all-important 50th reunion, returning for their 45th, most of us still able to walk unaided, and here we are in President Shapiro’s Friday afternoon meeting with all those alumni.  A propitious occasion.

The moment arrives.  Someone in the auditorium brings up the financial travails of Reed College out in Portland Oregon (I went to day camp there as a kid and almost went to college there, but thought something “out of town,” like Williams, might broaden my horizons.)  Naturally I seize on the mention of this topic to propose to President Shapiro that the college consider being more pro-active with its financial data, by posting or linking its Form 990s on the college website.  End of statement, brief and to the point.  His response also was short and to the point:  “I disagree; I think we’re transparent enough”  (or words very much to that effect, close enough for the quotation marks).  That’s about the entire exchange as it transpired in the public forum:  no rebuttals, rejoinders or further dialogue out there in front of the alumni.  Obviously, there’s a longer debate lurking here, but the context suggested that an intense exchange with the college president during this convocation was not the thing to launch.

After that alumni meeting, I was approached by Dave Kane, who I understand to be the founder of this EphBlog and seems to be an Institute Fellow at Harvard and also running a hedge fund up there around Boston. By the way, Harvard also does not post its Form 990, but you can get it from GuideStar.  Turns out that Mr. Kane and I share almost identical sentiments on the subject of financial transparency, at least for nonprofits; I can’t speak for him on the subject of hedge funds.  And so, that is why I have now been admitted as an eligible author in the EphBlog.  In my judgment, this is a topic with some importance and symbolic value for an academic institution.

No sense going on longer right now.   In my July 20 initial post on this subject I alluded to the longer account coming along, and this is that, or that is this, or whatever.  In short, President Shapiro said “No.”   I don’t understand the rationale for that “No,” but “no” is “no,” especially when the President is decamping for another and larger 501(c)(3) private university in the near future.  I do, however, ask myself:  Should he discover in Evanston the Northwestern University Form 990 is posted on their website, would he have it taken down?

There are many more things to be said about Form 990s in general, and some to be said about those filed by Williams in particular.  For those interested, this “Form 990” Category on the EphBlog now contains a July 27 post in which the entire sequence of Williams filings, from 1998 through 2008 are now on display for inspection and/or downloading.  All in searchable pdf format.  As to personal commentary, in the near future I may submit a post or two on the specific contents of the Williams filings (some of you seem interested in salary information; I am more interested in other details, but it’s all there).  And there are also, possibly, some interesting things to be said about comparison of the Forms 990 with the audited financial accounts which, up to now at least, indeed can be found on the Williams College website.

And that’s the story about how and when Morty said “No.”  Is that to be the end of the story?   With a new President coming, I hope not.

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