A Wall Street Journal op-ed says the fix is disclosing criminal convictions. The deeper problem is that the Form 990 has never followed the people at all.
The Treasury Department is weighing a requirement that tax-exempt organizations disclose whether certain officers, directors, or trustees have been convicted of specified financial or terrorism-related crimes — fraud, money laundering, tax evasion, securities fraud, material support to terrorists.
Nothing is final. As reported by CBS News, the proposal is still under consideration inside Treasury and the IRS, and no draft language has been released. A change to the Form 990 itself would ordinarily require a public notice before it took effect. Treasury has separately committed to proposed regulations and a comment period for the government-funding and fiscal-sponsorship changes it announced in April, but those are a different item traveling on a different track.
The proposal points at something real. It also doesn’t point far enough.
What the Filing Records, and What It Doesn’t
A Form 990 is a snapshot of one organization in one year. Revenue, expenses, compensation, governance, grants out, contractors paid. It is the most complete public record the nonprofit sector produces, and it is submitted under penalty of perjury.
What it does not record is history.
Writing in The Wall Street Journal, Manhattan Institute legal policy fellow Tal Fortgang argues that the disclosure under consideration misses the sharper problem: organizations shut down for misconduct can be reconstituted under new names by the same people, and nothing on the Form 990 connects the two. He is right about the gap. It is wider than the terrorism cases he uses to illustrate it.
Most exemption revocations are routine — automatic revocations triggered by three consecutive years of not filing, which describes hundreds of thousands of small and dormant organizations and implies nothing about anyone’s conduct. But when an organization loses its exemption for cause, is sanctioned, or is buried under a money judgment, nothing in the annual filing follows the people who ran it. They can incorporate a new entity in a matter of days. Once the new organization is up and filing, its officers appear with no obligation to say what they were doing before, or where. A donor, a program officer, or a board recruiter reading that filing sees a young organization with modest revenue and no history — because the form never asked for one.
The financial sector handles this differently. When someone violates securities law, the SEC can bar that person from the industry, and the bar attaches to the individual rather than the firm. Anyone can check it.
The nonprofit sector isn’t lawless here — state attorneys general have authority over charitable fiduciaries, the IRS can impose excise taxes on individuals for excess benefit transactions, and Treasury can sanction people directly. What’s missing is the checkable part: a single, visible, federal record that a donor or a board chair could consult before writing a check or extending an invitation.
The disclosure now under discussion would attach to individual criminal convictions. That’s narrower than the problem. An organization can dissolve under a cloud with no one convicted of anything, and its leadership can begin again on a clean sheet of paper.
The Objections Are Real
Federal law does not bar people with felony convictions from nonprofit service, and it shouldn’t. Rehabilitation is real. A meaningful part of the sector exists to help people rebuild after incarceration, and some of the best people doing that work have records of their own.
There are constitutional questions too. Compelled disclosure about who is associated with an organization runs into the First Amendment, and any rule would have to be narrow, neutral, and grounded in something more than a general interest in knowing things. As reported, the proposal may require an organization to disclose that a covered conviction exists without naming the person — which would cast suspicion across every officer on the filing while telling the public nothing useful.
Those are arguments about drafting, not about the principle. For charities, exemption is a public benefit and deductibility is a public subsidy. Organizations receiving both should expect the record to be legible.
Legible to Whom
Here is the part that gets skipped in the policy conversation: a disclosure requirement is worth exactly as much as the public’s ability to read the filing it lands on.
More questions on the form do not help a donor who has to register for an account to see the answers. They do not help a board member who has to learn a government database to understand the institution he governs, or a reporter who has to buy a subscription to check a number.
Philanthropy.org publishes Form 990 filings free, ungated, and open to anyone — no login, no subscription, no obligation. If Washington adds disclosures about leadership, government funding, and fiscal sponsorship, the value of the public filing goes up. So does the value of a place that keeps it open.
What a Filing Can’t Say
A Form 990 shows what an organization spent last year. It does not show what the organization is building, what it turned down, or why an unflattering ratio was the right decision that year. That context has to come from the organization itself, sitting next to the filing and clearly labeled as its own.
More disclosure will not settle every question of trust. It will make the questions harder to avoid.
That is good for legitimate nonprofits. It is very bad for the other kind.
