I found the answers in the IRS Form 990 — the publicly available tax filing that must be filled out by a variety of nonprofit organizations in the United States.

It turned out the museum was overseen by a tax-exempt charity, which meant its tax records were open to the public, which meant anyone curious about the museum, like me, could learn all kinds of things about its finances.

The tax records helped me write a series of news stories about how the museum was actually a telemarketing operation that raised $12 million from 2004 to 2009 in the name of helping the families of state troopers who died in the line of duty. For every dollar raised, this “charity” had actually spent less than one penny on that worthy goal.

The museum’s activities had already caught the attention of the Texas Attorney General’s office and it went to court to shut down the telemarketing operation, claiming it was duping donors.

Today, the museum is history. The story I stumbled across offers a lesson for any journalist who writes about a nonprofit organization at some point in their career (and we all do). It pays to take the time to look up the 990 — even for seemingly innocuous stories.

The 990 filing, while not perfect by any means, is a road map that can guide you to a better understanding of how a charity works. How much money does it make? How much does it pay its executives? Has it ever been the victim of embezzlement?

The 990 isn’t just a tool for journalists, either. It’s for anyone who wants to know more about a charity. These organizations are often holding out their hats for donations. In return, you’re allowed to look at how they handle the money they raise. And it’s easier than ever to get your hands on these tax records online, often for free.

Here’s how to find 990s and analyze them. Sometimes, the things you discover will raise questions that need to be answered by the charity. But you’ll never know to ask those questions unless you read the 990.

Obtaining tax records of charities

Different types of nonprofits fall under the U.S. Internal Revenue Code. Many follow 501(c)(3) of the code, which covers charities that raise funds from a variety of donors. There are also charitable foundations that rely on fewer benefactors. Churches don’t have to file a 990. But religious schools and private universities do.

The IRS says you can visit the office of any group that falls under 501(c)(3) and request copies of their tax filings for the past three most recent years. If they made more than $25,000, they’re supposed to file a 990-EZ or the full 990 form, depending on their revenue. But if you’re in a hurry or don’t want to raise alarm bells at the nonprofit, there are also free online tools to obtain the records.

The pioneer in making 990s widely available is Guidestar.org. Sign up for a free account, and Guidestar lets you search by keyword and location to find the charity of your choice. Click on a profile, and you can download recent 990 tax forms.

OK, so you found the 990 you’re looking for. Now what?

Analyzing the 990

Here are a few things I usually look at. The front page of the 990 gives you an overview of the organization:

You can find basic information, such as the main office address and phone number, the year the charity was founded and how many employees it has:

You’ll also find the overall revenue, expenses, fundraising numbers and whether the group made or lost money. Remember, nonprofit doesn’t mean no profit:

In the case of the obscure museum I was curious about, we can see that its telemarketers raised $2.2 million in 2009. Is that a lot or a little? Whenever you look at a financial document, it’s helpful to compare it to past reports to put those numbers into context. My suggestion is to look at several years of 990 filings. Plug the numbers you’re interested in into a spreadsheet, and you can now spot trends.

In my case, I was interested in how much money the museum raised, and how much money its related nonprofit entity was donating to the families of fallen state troopers. The San Antonio Express-News has a paid account with Guidestar, which let us download 990 tax filings for the previous five years. I typed the revenue totals and payments into a spreadsheet.

Across a broad time frame, it was clear that little money was trickling down to the families who needed it.

Digging deeper

The second page of the 990 has the mission statement of the organization and what it claims it accomplished — useful if you want to compare the rhetoric to reality.

Page 3 is the beginning of a lengthy questionnaire. Interesting nuggets might be buried there.

Part VI of the questionnaire asks about the management of the organization and whether it had a “significant diversion” of assets that year. If an organization checks “yes,” that usually means it was the victim of theft.

You don’t see this checked “yes” very often, but the Washington Post published an excellent series in 2013 about more than 1,000 organizations that lost millions of dollars.

Answering “yes” to questions in the questionnaire can trigger a requirement to fill out supplemental information further down in the 990. There you can find, for example, “Schedule O,” which is where the charity explains how the “significant diversion of assets” happened.

The salaries of the nonprofit’s top employees and the identities of board members often makes for interesting reading, which you’ll find in Part VII of the 990:

Some organizations fill this out in an attachment because it’s so long.

Again, be on the lookout for supplemental information toward the back of the 990 for more information about how employees and board directors are compensated.

You might find a “Schedule J” that fleshes out compensation packages for the group’s leadership. You might also find a “Schedule L,” which details “transactions with interested persons.” That probably sounds better than what it is, the “Potential Conflict of Interest” section. This is where a charity might report “excess benefit transactions” to the IRS, which means it overpaid in a transaction with someone who had ties to the organization, such as a charity executive.

Part IV of Schedule L lists business transactions with “interested persons,” such as board members. Last year, this section caught my eye when I was covering a rare, public clash between Louis Agnese Jr., the longtime president of the University of the Incarnate Word, and UIW’s board. In Schedule L, Incarnate Word reported several transactions with businesses tied to the school’s board members, including Charles Amato, the past chairman of the board:

Such transactions aren’t illegal. But Agnese’s critics said the board at UIW had always strongly supported Agnese. It was surprising when the new chairman, Charles Lutz, announced he couldn’t condone Agnese’s conduct.

You also might find “Schedule R,” which details related organizations and partnerships, and any transactions with them. This is where I learned the Texas Highway Patrol Museum was tied to other organizations, which led me to yet more 990 tax filings.

Tying it together

Remember the cover page of the 990 and its overview of revenue and expenses? Be sure to review three sections that offer greater detail on those subjects.

Part VIII is the “Statement of Revenue,” which breaks down revenue streams for an organization. You’ll find how much money comes from membership dues, fundraising events, government grants and other categories.

Part IX is the “Statement of Functional Expenses,” where you can find how much an organization spends on advertising, legal fees, travel and other expenses.

Part X is the balance sheet, where you can see the breakdown of assets and liabilities. You can check for things like how much cash the group had on hand at the beginning of the year compared to the end of the year.

This numbers might not seem very sexy. But the simple act of reading them, plugging them into a spreadsheet and comparing them over time can lead to good questions and beef up a mundane news story.

What’s in a name?

Keep in mind that some organizations call themselves “foundations,” but they might not be. A foundation usually relies on one or several wealthy benefactors, and by law, it must spend at least five percent of its investments on charitable purposes.

Foundations file a slightly different tax form called a 990-PF. One difference is that the foundation lists its grants and recipients. You can see where the money’s going and where the foundation’s priorities lie.

This came in handy when I profiled San Antonio billionaire B.J. “Red” McCombs, who has made headlines for big-ticket multi-million dollar donations that gets his names on buildings. But the 990-PF for his foundation listed a variety of gifts totaling $4.7 million, most of which were smaller donations that never made the news.

“Those gifts you never hear about,” McCombs told me. But he’s convinced the smaller donations make a difference. “If it’s to the food bank, for example, we fully believe that they can take $100 and do five times as much with it as as we could possibly do.”

Other helpful websites

The 990 is a starting point. Even Guidestar, which revolutionized public access to 990s, cautions that these tax records aren’t the best barometer of whether a charity is fulfilling its stated mission.

But the 990 can still be useful. Time after time, I’ve found gems in these seemingly dry tax filings that made me a little more informed about a charity and gave me good questions to ask.

Here are some other resources for finding 990s and checking out nonprofits any time you drive by, say, an empty museum and wonder what their deal is:

• The IRS’ exempt organizations search tool: Allows you to verify an organization’s tax exempt status, and download the agency’s entire database of nonprofit entities.
• The Foundation Center’s 990 finder: Another free online source to track down 990s. The group offers an online guide to demystifying the 990 for foundations.
• Citizen Audit: An awesome, fee-based tool that lets you conduct keyword searches across millions of nonprofit tax documents.
• Federal Audit Clearinghouse: Searchable database of nonprofit organizations that receive federal dollars and must undergo audits.
• Charity Navigator: Offers 990s for nonprofits and rates thousands of organizations.

The post How to find and analyze tax records of charities: The IRS 990 form explained appeared first on John Tedesco.

The caller probably promised that every penny of your donation stays in Bexar County. You were probably told that it all goes to a worthy cause.

Like most sales pitches, it wasn’t entirely true.

Last year the union representing Bexar County sheriff’s deputies hired a telemarketing firm called PFR Promotions to raise money for a charitable program called “Shop with a Sheriff.” Also called “Shop with a Cop” in other cities, it’s a holiday shopping spree for poor kids.

The event is real. But most of the money from donations goes to PFR Promotions, not the kids.

I started looking into Shop with a Sheriff after receiving a tip from someone who read our stories about the Texas Highway Patrol Museum, another telemarketing entity that relied on the credibility of law enforcement officers to raise money. The small San Antonio museum actually employed hundreds of telemarketers across Texas who raised millions. Yet only a fraction was spent on charity. Executives squandered donations on luxury vehicles and junkets. In December 2011, the Texas Attorney General’s Office filed a lawsuit and successfully shut down the operation.

Shop with a Sheriff is a real event that helps children. But most of the money raised — 67 percent — goes to PFR Promotions, a telemarketing firm based in Arizona. Only a third trickles down to the charitable cause.

Donors aren’t being told that vital information. In Texas, the law requires telemarketers who are raising money for law enforcement organizations to disclose their overhead before any donation is made. The law applies to companies located outside Texas. Organizations are also required to report that information to the Texas attorney general, which the union had failed to do.

Union President Juan Contreras acknowledged that he wasn’t aware of that legal requirement and pledged to take care of the problem immediately. He said the union might sever its relationship with PFR Promotions.

But in the meantime, I’d love to hear from potential donors whether PFR’s telemarketers are complying with the law.

If you’ve received a phone call, feel free to contact me and let me know if the caller is disclosing who he works for — and where your money is really going.

The post Have you been asked to donate to Shop with a Sheriff? Call me. appeared first on John Tedesco.

Sued by the Texas Attorney General and accused of squandering donations, the Texas Highway Patrol Museum in King William is a step closer to its demise.

Check out our past news coverage of the museum, which is actually a telemarketing operation that spends only a fraction of its revenue on charitable causes.

The post Facing lawsuit, board of Texas Highway Patrol Museum gives up $1.2 million in assets appeared first on John Tedesco.

American Journalism Review delved into the declining state of investigative journalism last week with articles and videos that quantified what’s been lost — and what might be gained:

Related: How to send a news tip to an investigative reporter

The post The declining state of investigative journalism appeared first on John Tedesco.

But then the conversation veered in a direction unfamiliar to traditional newsrooms. Instead of planning how to get the story published before word of it leaked, the excited editors started throwing out ideas for how they could share Johnson’s reporting with a large array of competitive news outlets across the state and around the country. No one would get a scoop; rather, every outlet would run the story at around the same time, customized to resonate with its audience, be they newspaper subscribers, Web readers, television viewers, or radio listeners. California Watch’s donors—at this point, a handful of high-powered foundations—expect it to publish high-impact investigative journalism about California as widely as possible.

My favorite line: How journalists are a persistent bunch and continue to push for ways to do watchdog journalism. “I do have a need to investigate the bastards,” said Charles Lewis, the founder of the Center for Public Integrity.

Related: How to securely contact an investigative journalist

My only quibble with this story is that it has a Texas-sized hole: There’s no mention of the Texas Tribune or Texas Watchdog. Wuh?

The post ‘A need to investigate the bastards’ appeared first on John Tedesco.

These so-called virtual goods, like a $1 illustration of a Champagne bottle on Facebook or the $2.50 Halloween costume in the online game Sorority Life, are no more than a collection of pixels on a Web page.

But it is quickly becoming commonplace for people to spend a few dollars on them to get ahead in an online game or to give a friend a gift on a social network.

There are several companies that sell virtual goods — one of them being Zynga. The Times story mentioned Zynga and quoted its CEO. But the story paid scant attention to recent blog posts by TechCrunch’s Michael Arrington, who revealed Zynga was making gobs of money from unwary people, often kids, who unwittingly subscribe to deals they don’t want.

The omission outraged Fake Steve Jobs, AKA Dan Lyons, who claimed the story is Exhibit A in the case of the dying mainstream media:

Um, New York Times? If you guys are still wondering why people are dropping their subscriptions and getting their news from blogs instead of you — this is why.

And to all those people who go around wringing their hands and saying what are we going to do when the “real newspapers” all die and we have to get our news from Gawker and HuffPo and TechCrunch? Friends, I think we’re going to be just fine.

The usual suspects such as Techdirt applauded this post. But they all missed the point.

The lament about the decline of newspapers is not really about the loss of a physical paper. It’s about the loss of institutions that pay people a full-time salary to look under rocks and share important stories with their communities.

It’s awesome TechCrunch uncovered the shenanigans at Zynga. Other blogs like the Consumerist and The Smoking Gun have produced fantastic, public-service journalism here and here.

Related: Telling stories with data: Police chases and drug smugglers on the Texas-Mexico border

But such in-depth coverage from these blogs is uncommon, even though they are among the top-ranked blogs on Technorati and actually make decent money. The vast majority of bloggers don’t enjoy the luxury of a sizable paycheck. For most bloggers, it’s a hobby. And it’s difficult, if not impossible, to do the grunt-work of journalism on a part-time basis.

I would love to hear Fake Steve Jobs explain how a blogger with a day job is going to find the time to stake out a grand jury at the courthouse, or dig up details about a crooked land deal being hatched at City Hall.

Who’s going to work on these local stories for readers in San Antonio — TechCrunch?

Newspapers, despite all their faults and foibles, are still the ones doing most of this valuable work.

Fake Steve Jobs fell for the old fallacy of newspapers vs. bloggers. I’m sure I could find plenty of stories where the Times routinely scooped TechCrunch. But this kind of tit-for-tat tally entirely misses the point. The real problem is finding new economic models that support full-time journalism. That’s why it’s interesting to watch experiments like the Texas Tribune, ProPublica and nonprofit news organizations in other parts of the country. These organizations are paying people to work full-time on important stories.

Fake Steve Jobs — that’s the real issue.

(Photo credit: Tripsspace)

The post Fake Steve Jobs misses the real point appeared first on John Tedesco.

There’s more news, interviews and criticism this week about the Texas Tribune, an ambitious nonprofit news site led by former Texas Monthly editor Evan Smith and venture capitalist John Thornton:

(Photo credit: mattwright on Flickr)

The post Texas Tribune receives big grant, but Slate claims nonprofit journalism is flawed appeared first on John Tedesco.

Texas has spent more than $1.4 billion in homeland security money on an effort that was supposed to make people safer, but the program has devolved into a massive spending spree undertaken with inadequate planning, coordination or accountability.

The problem is apparently persisting in California, where a new nonprofit organization of investigative reporters called California Watch reviewed stacks of state audits that tracked how grant money has been spent:

Related: Web tools and apps to track weather emergencies in Texas

Under the state’s open-records laws, California Watch found scores of instances of wasteful spending, purchasing violations, error-prone accounting and shoddy oversight at agencies across the state during the years immediately following 9/11.

California Watch, a new unit started by the nonprofit Center for Investigative Reporting, examined thousands of pages of documents from 160 monitoring reports written by state homeland security officials who visited cities and counties across California to inspect equipment and grant records for compliance with federal guidelines.

California Watch is the latest nonprofit group geared towards investigative journalism. Similar nonprofit models, such as Texas Watchdog and the Texas Tribune, are attempting to fill the vacuum left by gutted newsrooms across the country.

Investigating whether public officials are actually doing a good job keeping people safe is important work — no matter who’s doing it.

The post Homeland insecurity: How federal grants are being misspent appeared first on John Tedesco.

Texas Attorney General Greg Abbott is unveiling a new Web site where you can soon look up the “990” tax forms of nonprofit organizations in Texas.

The 990 is a good starting point when you want to know more about a tax-exempt charity and what it does with its money. You can find out how much the organization spends on fundraising, or what it pays its top officials. Journalism students at private schools can use the 990 to get financial information about their university.

Related: How to find and analyze tax records of charities: The IRS 990 form explained

Former San Antonio Express-News columnist Roddy Stinson looked at 990 tax forms of a local Head Start provider, Parent/Child Inc. The group is a nonprofit organization that receives millions of dollars every year from the federal government to provide early education for poor children.

Stinson found out that the taxpayer funded, nonprofit organization paid its top executive $200,000. His first of many columns about the topic was: “Mamas, let your babies grow up to be Head Start executives.”

Another good Web site for information about nonprofits is Guidestar. You can sign up to Guidestar for free and look up three year’s worth of 990s. Examining the tax forms for multiple years, and not just one year, is a good way to find patterns, such as whether revenues are going down.

Guidestar is run by — you guessed it — a nonprofit.

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