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Before the Subcommittee on Oversight, Committee on Ways and Means, 
House of Representatives: 

United States Government Accountability Office: 


For Release on Delivery Expected at 10:00 a.m. EDT: 

Tuesday, July 24, 2007: 

Nonprofit Sector: 

Increasing Numbers and Key Role in Delivering Federal Services: 

Statement of Stanley J. Czerwinski: 
Director, Strategic Issues: 


GAO Highlights: 

Highlights of GAO-07-1084T, a testimony before the Subcommittee on 
Oversight, Committee on Ways and Means, House of Representatives 

Why GAO Did This Study: 

The nonprofit sector is an important means through which public 
services are delivered and national goals addressed. The federal 
government increasingly relies on networks, often involving nonprofits 
that address many issues—health care, education, and human services, 
for example. Because nonprofit organizations play a key role as 
partners with the federal government, there is a need to better 
understand the sector. This testimony (1) provides a picture of the 
nonprofit sector—its size, composition, and role in the economy; (2) 
discusses how and why the federal government partners with the sector; 
and (3) identifies issues related to the sector as a federal partner 
that need to be better understood. GAO’s preliminary work on this topic 
focused on the intersection of nonprofit organizations and the federal 
government, including trends, the use of federal funding, and emerging 
issues. GAO interviewed key experts from relevant associations and 
academia, reviewed related research, and hosted roundtable discussions 
with key researchers and practitioners in the nonprofit area. 

What GAO Found: 

U.S. nonprofit organizations have a significant role both in the 
economy as a whole and as providers of services. While the majority of 
nonprofit organizations have relatively small operating budgets, 
together their impact is large. For example, researchers estimate that 
the sector’s spending in recent years was roughly 11 to 12 percent of 
the nation’s gross domestic product and, in 2002, the sector had over 
9.6 million employees, about 9 percent of the civilian workforce. 
Further, the sector has grown; the number of charitable organizations 
reporting almost tripled over the last two decades. 

The federal government increasingly partners with nonprofit 
organizations as they bring many strengths to these partnerships, such 
as flexibility to respond to needs and access to those needing 
services. These organizations receive significant funds from government 
sources to provide services. Researchers have attempted to quantify 
these funds. For example, one estimate is that the federal government 
spent about $317 billion on nonprofit organizations in fiscal year 
2004. However, the lack of data makes measuring federal funds to 
nonprofit organizations difficult. Many funds come through indirect 
routes, such as through state and local government, adding to the 
difficulty of determining funding and measuring performance. Although 
IRS is generally responsible for overseeing the tax-exempt status of 
these organizations, there is less focus at the federal level on the 
comprehensive role of nonprofits in providing services using federal 

Our preliminary look at how the federal government interacts with the 
nonprofit sector indicates that several policy issues have emerged; 
examples follow. 

* Coordination and collaboration—the increasing importance of 
collaboration between all levels of the government and nonprofit 
* Internal governance issues—the need to strengthen internal governance 
of nonprofit organizations.
* Capacity—the need to improve smaller nonprofit organizations’ 
capacity to address weaknesses in finances, administration, and human 
* Nonprofit sector data—the need for improved data on the sector’s 
size, financial status, and funds from federal sources.
* Administrative and reporting requirements—the many requirements to be 
accountable, which while important and necessary, require information 
in different formats and with increasing complexity.
* Fiscal challenges for nonprofits—the instability of some nonprofits’ 
financial position. 

At the request of the Congress, we are beginning work to examine these 
issues further. 


To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Stanley J. Czerwinski at 
(202) 512-6806 or 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I appreciate the opportunity to participate in today's hearing to 
discuss our preliminary work and observations on the role the nonprofit 
sector plays in partnering with federal, state, and local governments 
to deliver programs and services.[Footnote 1] Although the sector is an 
important means through which many key national goals are addressed, 
its role can be nearly invisible to federal policy-setting decision 
makers when designing and implementing programs. Broadly stated, the 
federal government increasingly relies on large and complex networks of 
nonfederal actors to carry out initiatives. In recent years, most 
oversight of the sector has focused on its tax-exempt status. However, 
because the nonprofit sector plays a key role in delivering services 
funded by the federal government, there is also a need to better 
understand the sector as a partner on which the federal government 

The nonprofit sector is defined primarily by its tax-exempt status, a 
designation that occurs at both the federal and state levels of 
government. In addition, nonprofit organizations share certain other 
characteristics. First, they work to serve public purposes or the 
common goals of their members. Further, they can benefit from voluntary 
labor and are self-governing. In addition, they are not permitted to 
distribute profits to their members but must instead use them to 
further the organization's charitable purpose. Beyond these 
commonalities, they have a diverse set of missions, and many of those 
missions are related to those of federal agencies. As a result, it is 
important to better understand the composition of the sector, its 
importance, and its strengths and challenges. 

An estimated 1.8 million organizations were recognized as federal-tax- 
exempt organizations as of September 2006.[Footnote 2] Of these, about 
60 percent (see fig. 1) are public charities or foundations that 
benefit the broad public interest, and are referred to as 501(c)(3) 
organizations. Our focus today is largely on charities, as they 
represent the majority of the sector. (See further clarification of key 
terms in app. I.) 

Figure 1: Categories of Tax-Exempt Entities: 

[See PDF for image] 

Source: GAO analysis of IRS data as of September 30, 2006. 

Note: The 501(c)(3) organizations are the public charities and 
foundations; (501)(c)(4) are social welfare organizations. 

[End of figure] 

As you know, the Internal Revenue Service (IRS) serves as the agency 
that generally oversees the nonprofit sector at the federal level. IRS 
focuses on whether organizations meet tax-exempt requirements and 
comply with federal laws, such as those governing the use of funds 
intended for a charitable purpose. It approves organizations for 
federal tax-exempt status and is the recipient of annual reporting of 
financial data on Forms 990, which are required from organizations with 
gross receipts over $25,000.[Footnote 3] In addition, a few other 
federal organizations, such as the Federal Trade Commission and the 
Department of Justice, provide oversight of nonprofit organizations in 
certain specialized areas. States also play an important role in the 
oversight of nonprofits, as they have interests and responsibilities in 
areas such as the legitimacy of charitable fundraising and whether a 
charity is meeting the charitable purpose for which it was created. In 
addition, the public plays a role in oversight through its ability to 
review key information on individual organizations, to the extent 
useful information is available. 

My testimony today will point out some of the diversity and the range 
of characteristics present within the sector, along with some of the 
issues that arise as nonprofit organizations interact with the federal 
government. I would like to (1) provide a picture of the nonprofit 
sector--its size, composition, and role in the economy; (2) discuss how 
and why the federal government partners so extensively with the sector; 
and (3) identify issues that others have raised related to the sector 
as a federal partner that need to better understood. 

My statement is based largely on some preliminary work we recently 
completed that focused broadly on the intersection of nonprofits and 
the federal government. We focused on trends in the use of federal 
funding and on identifying emerging issues in the nonprofit sector. We 
interviewed representatives from several large nonprofit member 
associations, research and advocacy organizations, academic 
researchers, foundation representatives, and nonprofit practitioners. 
We hosted two roundtable discussions with key researchers and 
practitioners in the nonprofit area. We also reviewed literature on the 
sector from academic centers, research institutes, foundations, and 
others to better understand sector trends and issues, and to identify 
additional experts for interviews. Our work included a review of our 
previous work related to nonprofits on a wide variety of topics, such 
as tax policy, human service programs, and executive compensation. Our 
work was performed in accordance with generally accepted government 
audit standards. 

Role of Nonprofit Organizations in the Economy and as Providers of 
Services Is Significant: 

While the majority of nonprofits individually have relatively small 
operating budgets, as a whole, the nonprofit sector has a significant 
presence in the U.S. economy, according to researchers of the nonprofit 
sector. For example, 

* In 2004, nonprofit organizations that submitted Forms 990 to IRS held 
an estimated $3 trillion in total assets and received $1.4 trillion in 
revenues.[Footnote 4] 

* During the period 1998 through 2002, spending reported by tax-exempt 
entities was roughly 11 to 12 percent of the nation's gross domestic 
product.[Footnote 5] 

* The tax-exempt sector had over 9.6 million employees, about 9 percent 
of the civilian workforce in 2002.[Footnote 6] 

* Wages and salaries paid to nonprofit sector employees comprised 8.3 
percent of those paid in the U.S. in 2004.[Footnote 7] 

In addition to representing a significant portion of the U.S. economy, 
the sector is growing. Data indicate that from May 2000 to May 2006, 
the number of registered public charities has grown over 30 percent 
from about 646,000 to about 851,000, although organizations that have 
gone out of existence may be included in those numbers.[Footnote 8] 
Other data also suggest growth in the sector. As shown in figure 2, the 
number of 501(c)(3) organizations completing the Form 990 has almost 
tripled over the last two decades (from 1986 to 2006) from about 
148,000 to about 427,000. 

Figure 2: Growth in the Number of Reporting 501(c)(3) Organizations-- 
1986 through 2006: 

[See PDF for image] 

Source: IRS, Statistics of Income Division, 1986-2002 data; National 
Center for Charitable Statistics (using the IRS Business Master File 
January, 2007), 2006 data. 

Note: Public charities and private foundations are both 501(c)(3) 
entities. Organizations that have annual gross receipts not normally in 
excess of $25,000, churches, and certain other exempt organizations are 
not required to file the annual information return. 

[End of figure] 

Experts have identified several possible contributing reasons for this 

* a shift in recent decades away from government providing most 
services directly; 

* the expansion of service-related industries in the U.S., of which 
many nonprofits are a part; 

* deinstitutionalization during the 1960s and 1970s that eliminated 
large, public care facilities in favor of smaller, community-based 
organizations, often operated by nonprofit entities; and: 

* the trend in devolution in certain policy areas such as welfare, 
which contributed to a lessening role of the federal government and 
more localized control in the hands of state, local, and nonprofit 

Nonprofit organizations are found in a wide variety of policy areas 
such as health care, education, and human services, and include many 
prominent and highly visible community institutions, such as hospitals, 
museums, job training centers, and churches. (See a list of categories 
in app. 2.) These organizations also represent a diverse range of 
sizes. According to the Independent Sector, 73 percent had annual 
budgets of less than $500,000 in 2004 and only 4 percent had budgets 
exceeding $10 million.[Footnote 9] 

Much of the data on the sector come from the IRS Form 990, but those 
data have limitations. For example, returned Forms 990 are sometimes 
incomplete or inaccurate and are not consistently followed up on, and 
some nonprofit organizations required to submit Forms 990 do not do so. 
In addition, for certain types of funding, the Form 990 does not 
distinguish between government and private sources of support. It also 
does not break out the sources of government grants by federal, state, 
or local level. We have pointed out in the past the importance of 
requiring information in a more timely and user-friendly way on IRS 
Forms 990.[Footnote 10] 

Federal Government Increasingly Partnering with Nonprofit 

Nonprofit organizations bring many strengths to their partnerships with 
the federal government. Their breadth and diversity allow the sector to 
address the specific needs of communities and of individuals. 
Researchers commenting on the advantages of nonprofits point out the 
provision of benefits in the public interest, often with greater 
flexibility and access than can be achieved by the public sector. 
Nonprofits often bring an indepth understanding of a particular 
geographic area or special population and have access to underserved 

Nonprofit organizations play a large and increasing role in delivering 
services traditionally provided by the government, according to 
researchers. Their research indicates that nonprofit organizations 
receive significant funds from government sources and that over time 
these funds have increased. As we previously noted, data are limited 
but researchers have attempted to analyze data from various sources and 
identify trends in federal funding to nonprofits. Their work offers a 
glimpse into the magnitude of federal funds going to nonprofits, but 
does not provide a comprehensive analysis of the various funding 
streams. For example: 

* Researchers have reported that the federal government provided about 
$115 billion directly to nonprofits in fiscal year 2001, the majority 
of which hospitals received through the Medicare program. Indirect 
federal funds through state and local governments to nonprofits were an 
estimated $84 billion, totaling about $199 billion, or about 15 percent 
of federal payments and grants.[Footnote 11] 

* Data from other researchers indicate that the federal government 
spent an estimated $317 billion on nonprofit organizations in fiscal 
year 2004.[Footnote 12] 

* Researchers estimate that federal support to nonprofit organizations 
increased more than 230 percent from fiscal year 1980 to fiscal year 
2004 in adjusted dollars.[Footnote 13] 

Federal funds reach nonprofit organizations through many paths (see 
fig. 3). Some flow directly from federal agencies to nonprofit 
organizations, such as research grants to universities. Some funds flow 
to states as grants, whose funds may flow to nonprofit organizations, 
or may flow to local governments that compensate nonprofit 
organizations for services with those funds. Also, some federal funds 
move to nonprofits on the basis of individuals' decisions, that is, 
from federal programs to nonprofits selected by the consumer, such as 
for health care. In addition to direct and indirect federal funds, 
nonprofit organizations benefit from being tax-exempt and also from 
other tax policies, such as donors' ability to deduct contributions on 
their taxes. 

Figure 3: Examples of Paths Federal Funds Take to Nonprofit 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Emerging Policy Issues and Challenges Facing the Nonprofit Sector: 

The current federal oversight of nonprofits is focused on 
organizations' tax-exempt status and on specific programs. However, 
there is less focus on understanding the overall role of nonprofits as 
implementers of national and federal initiatives, and how to best 
ensure that nonprofits have the support they need. As we spoke with 
researchers and practitioners, several issues emerged as needing 
attention in order to ensure the strength of this important partner to 
the federal government. We have looked at specific issues involving 
nonprofit organizations over the years, but our past work was largely 
related to specific programs. We heard several common issues while 
taking this more comprehensive look at nonprofit organizations' 
interaction with the federal government (see fig. 4). 

Figure 4: Emerging Policy Issues and Challenges Facing the Nonprofit 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Coordination and collaboration--One theme that surfaced in our 
preliminary research was the importance and value of coordination and 
collaboration between nonprofit organizations and government at all 
levels. As we pointed out in our work on 21st century challenges, the 
government relies increasingly on new networks and partnerships to 
achieve critical results and develop public policy, often including 
multiple federal agencies, non-or quasi-government organizations, for- 
profit and nonprofit contractors, and state and local 
governments.[Footnote 14] A complex network of governmental and 
nongovernmental entities shape the actual outcomes achieved, whether it 
be through formal partnerships in grant programs or through independent 
actions of each addressing common problems. For example, our research 
on disaster relief efforts following September 11 and Hurricanes Rita 
and Katrina highlighted the role of nonprofits in providing assistance 
and the importance of communication and coordination of services with 
government entities. We pointed out that the scope and complexity of 
the September 11 attacks presented challenges to charities in their 
attempts to provide seamless social services for surviving family 
members and others in need of aid.[Footnote 15] With regards to the 
response to Hurricanes Katrina and Rita, we noted that charities could 
improve coordination among charities and the Federal Emergency 
Management Agency.[Footnote 16] 

We believe that many of the key practices that help enhance and sustain 
collaboration among federal agencies can be helpful between government 
and nonprofit organizations, such as when both parties collaborate to: 

* define and articulate a common outcome; 

* establish mutually reinforcing or joint strategies; 

* identify and address needs by leveraging resources; 

* agree upon roles and responsibilities; 

* establish compatible policies, procedures, and other means to operate 
across boundaries; 

* develop mechanisms to monitor, evaluate, and report the results of 
collaborative efforts; 

* reinforce accountability for collaborative efforts through plans and 
reports; and: 

* reinforce individual accountability for collaborative efforts through 
performance management systems.[Footnote 17] 

Internal governance issues--A second theme that surfaced in our 
preliminary research was the need to strengthen governance of nonprofit 
organizations, a point made by the sector itself as well as by others. 
At the organization level, a sound governance structure can establish 
the set of checks and balances that help steer an entity toward result- 
oriented outcomes consistent with their purposes while also guarding 
against abuses. Concerns about accountability and transparency of 
nonprofit organizations have grown in recent years. In 2004 and 2005, 
the Senate Finance Committee held hearings to look more closely at 
practices that are illegal or not in keeping with standards typical of 
the charitable sector, and released a discussion draft of possible 
solutions. In October 2004, the Independent Sector convened a panel, 
whose report made several recommendations to address concerns.[Footnote 
18] The panel continues to focus on self-regulation as a way to address 
these concerns, although there are mixed opinions on the potential 
success of self-regulation. In addition, several efforts are under way 
within the sector to raise awareness of ways to improve internal 
governance of nonprofits, including associations focusing on providing 
training or consulting, and national certification processes.[Footnote 

Capacity--Another area to which researchers suggest attention should be 
paid is improving the capacity that smaller nonprofit organizations 
have to address weaknesses in finances, administration, and human 
capital. Many nonprofits struggling to accomplish their mission on 
limited budgets lack the resources that could allow them to better 
manage their finances and strengthen their infrastructure. In addition, 
particularly in smaller nonprofit organizations, the strengths of board 
members may be in addressing their organization's mission, and they may 
lack legal and financial knowledge or the skills necessary to oversee a 
nonprofit entity. One specific area identified as needing attention is 
the development of human capital, as these organizations need to 
address a complex set of issues, such as competition for service 
workers, leadership succession, and staff turnover. One promising 
change is the increase in graduate programs offering a concentration in 
nonprofit management from 17 in 1990 to 97 in 2001.[Footnote 20] While 
there has not been a comprehensive effort by the federal government to 
improve the capacity of nonprofit organizations, several federal 
programs provide capacity-building grant funding and technical 
assistance to nonprofits. Providing assistance to improve capacity may 
be one area where the federal government could employ a more strategic 

Nonprofit sector data - As I mentioned earlier, there is a lack of 
sufficient knowledge on a key federal government partner and its role. 
Researchers point out that without better data on the nonprofit sector 
as a whole, appropriate and timely policy decisions regarding 
nonprofits cannot be made. Some actions under way may improve 
information on tax-exempt organizations. Beginning in 2008, small tax- 
exempt organizations that previously were not required to file Form 990 
returns, with some exceptions (such as churches) will be required to 
file a shorter notification form electronically.[Footnote 21] In July 
2007, IRS began mailing educational letters to over 650,000 small tax- 
exempt organizations that may be required to submit the notice. 
Further, IRS is seeking comments on a redesigned Form 990, intended to 
provide a realistic picture of organizations and their operations and 
to accurately reflect an organization's operations and use of 
assets.[Footnote 22] In addition to the Form 990, other sources of data 
have also been used to better understand the sector, such as Bureau of 
Labor Statistics employment data, but continued access to that data has 
been a problem. In addition, the funds to perform the analysis 
generally come from the nonprofit sector, and are not consistently 

Administrative and reporting requirements--Practitioners and 
researchers alike addressed the difficulty that nonprofit 
organizations, particularly smaller entities, have in responding to the 
administrative and reporting requirements of their diverse funders. 
While funders need accountability, the diverse requirements of 
different funders make reporting a time-consuming and resource- 
intensive task. Experts report that both government and foundations 
have increasing expectations that nonprofits conduct performance 
measurement, but meeting the expectations, given the size of grants and 
the evaluation capabilities of the staff, can be difficult. One 
researcher said that practitioners report performance evaluation as one 
of the biggest challenges they face, given their capacity issues. 

Fiscal challenges for nonprofits--Nonprofit organizations, particularly 
smaller entities, often operate with limited budgets and have limited 
capital. As one researcher noted, the logic of the business world is 
"upended" with nonprofit organizations.[Footnote 23] Researchers and 
practitioners have pointed out that nonprofit organizations often have 
inadequate funds to invest in management infrastructure and that 
government and private foundations have not provided them adequate 
overhead funding to, for example, pay salaries to attract employees 
with needed skills or upgrade systems that would maximize efficiency. 
Funders--federal, state and local governments, foundations, and private 
donors--are willing to pay varying amounts toward overhead, resulting 
in nonprofit organizations needing to sometimes turn to other sources 
to cover their overhead costs. We believe this is an area in which more 
data are needed to fully understand the implications of reimbursement 
for overhead charges. 

Concluding Observations: 

Virtually every American interacts with the nonprofit sector in his or 
her daily life through a broad range of concerns and activities such as 
health care, education, human services, job training, religion, and 
cultural pursuits. In addition, federal, state, and local governments 
rely on nonprofit organizations as key partners in implementing 
programs and providing services to the public. Given the way the sector 
is woven into the basic fabric of our society, it is essential we 
maintain and cultivate its inherent strength and vitality and have 
accurate and reliable data on the overall size and funding flows to the 
sector. Keys to a healthy nonprofit sector include strengthening 
governance, enhancing capacity, ensuring financial viability, and 
improving data quality without overly burdening the sector with 
unnecessary or duplicative reporting and administrative requirements. 
At the request of the Congress, we are beginning work to examine these 
issues further. 

Mr. Chairman, this concludes my prepared statement. I would be happy to 
respond to any questions you or other Members of the Committee may 

Contacts and Acknowledgments: 

For further information on this testimony, please contact Stanley 
Czerwinski at (202) 512-6806. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this testimony. Individuals making key contributions to this 
testimony include David Bobruff, Tom James, Heddi Nieuwsma, Carol 
Patey, and Tom Short. 

[End of section] 

Appendix I: Key Terms Related to Nonprofit Status: 

* Tax-exempt organization: An entity determined to be exempt from 
federal income taxes. 

* Nonprofit status: A state-law concept, in which approved entities may 
be eligible for exemption from sales, property, and state income taxes. 

* Section 501(c)(3) organization: An organization that has an exempt 
purpose such as serving the poor; advancing religious, educational, and 
scientific endeavors; protecting human rights; and addressing various 
other social problems. 

* IRS Form 990: An IRS information return that many tax-exempt 
entities, meeting certain requirements, must file annually. 

[End of section] 

Appendix II: Types of Programs and Services in the Nonprofit Sector: 

The IRS uses the National Taxonomy of Exempt Entities system to 
classify tax-exempt organizations by industry subsector. When an 
organization is initially approved as tax-exempt, it is classified into 
one of these 10 broad categories of tax-exempt entities: 

* Arts, culture, and humanities Museums, performing arts centers, media 
and communications, historical societies: 

* Education Elementary and secondary schools, colleges and 
universities, libraries and educational services: 

* Environment and animals Botanical gardens, natural resources 
conservation and protection: 

* Health Hospitals, mental health services, medical research, home 
health care, substance abuse treatment: 

* Human services Homeless shelters, youth development, job training, 
crime prevention, soup kitchens, recreation and sports: 

* International, foreign affairs Human rights, international cultural 
exchange, international development, peace and security, foreign 

* Public, societal benefit Foundations, civil rights, credits unions, 
economic development, public transportation, veterans' organizations: 

* Religion-related Religion-related organizations, interfaith 
coalitions, religious media and communications: 

* Mutual membership/benefit Insurance providers, pension and retirement 
funds, fraternal societies, cemeteries: 

* Unknown, unclassified: 


[1] The tax-exempt sector is often referred to as the nonprofit sector. 

[2] GAO, Tax Compliance: Thousands of Organizations Exempt from Federal 
Income Tax Owe Nearly $1 Billion in Payroll and Other Taxes, GAO-07-563 
(Washington, D.C.: June 29, 2007), p. 5. 

[3] Churches are not required to file for tax-exempt status, nor to 
report annually. 

[4] The Urban Institute, "The Nonprofit Sector in Brief," The Nonprofit 
Sector in Brief: Facts and Figures from the Nonprofit Almanac 2007 
(Urban Institute, 2006), hyperlink, 
(downloaded Oct. 30, 2006). 

[5] GAO, Tax-Exempt Sector: Governance, Transparency, and Oversight Are 
Critical for Maintaining Public Trust, GAO-05-561T (Washington, D.C.: 
Apr. 20, 2005), p. 9. 

[6] GAO-05-561T, p. 10. 

[7] National Center for Charitable Statistics, "NCCS Quick Facts" 
(Urban Institute, May 2006), hyperlink, (downloaded Dec. 
15, 2006). 

[8] National Center for Charitable Statistics (using the IRS Business 
Master File, May 2006), hyperlink, (downloaded Dec. 18, 

[9] The Independent Sector describes itself as a nonprofit, nonpartisan 
coalition of about 600 national public charities, foundations, and 
corporate philanthropy programs, collectively representing tens of 
thousands of charitable groups in every state. 

[10] GAO-05-561T. 

[11] Woods Bowman and Marion R. Fremont-Smith, "Nonprofits and State 
and Local Governments," Nonprofits and Government, 2nd Edition, eds. E. 
Boris and C. Steurle (Washington, D.C.: The Urban Institute Press, 
2006), pp. 191-194. 

[12] Alan Abramson, Lester Salamon, and C. Eugene Steurle, "Federal 
Spending and Tax Policies: Their Implications for the Nonprofit 
Sector," Nonprofits and Government, 2nd Edition, eds. E. Boris and C. 
E. Steurle (Washington, DC: The Urban Institute Press, 2006), p. 118. 

[13] Alan Abramson, Lester Salamon, and C. Eugene Steurle, "Federal 
Spending and Tax Policies: Their Implications for the Nonprofit 

[14] GAO, 21st Century Challenges: Reexamining the Base of the Federal 
Government, GAO-05-325SP (Washington, D.C.: February 2005). 

[15] GAO, September 11: More Effective Collaboration Could Enhance 
Charitable Organizations' Contributions in Disasters, GAO-03-259 
(Washington, D.C.: Dec. 19, 2002), p. 3 . 

[16] GAO, Hurricanes Katrina And Rita: Coordination between FEMA and 
the Red Cross Should Be Improved for the 2006 Hurricane Season, GAO-06-
712 (Washington, D.C.: June 8, 2006), p. 1. 

[17] GAO, Results-Oriented Government: Practices That Can Help Enhance 
and Sustain Collaboration among Federal Agencies, GAO-06-15 
(Washington, D.C.: Oct. 21, 2005). 

[18] Panel on the Independent Sector (Convened by Independent Sector), 
Strengthening Transparency, Governance, Accountability of Charitable 
Organizations (Washington, D.C., June 2005). 

[19] For example, BoardSource, National Council of Nonprofit 
Associations, and the Alliance for Nonprofit Management all focus to 
some extent on strengthening internal governance of nonprofits. An 
example of a national certification process is one established by the 
Standards for Excellence Institute. 

[20] Alan J. Abramson, and Rachel McCarthy. "Infrastructure 
Organizations," from Lester M. Salamon, The State of Nonprofit America, 
1st ed. (Washington, D.C.: Brookings Institution Press, 2002), p. 337. 

[21] The form is entitled "Form 990-N Electronic Notice (e-Postcard) 
for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ." 

[22] We have not evaluated the redesigned Form 990. 

[23] Miller, Clara. "The Looking-Glass World of Nonprofit Money: 
Managing in For-Profits' Shadow Universe," The Nonprofit Quarterly, 
vol. 12, issue 1 (Spring 2005).

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Congressional Relations: 

Gloria Jarmon, Managing Director, (202) 512-4400 U.S. 
Government Accountability Office, 441 G Street NW, Room 7125 
Washington, D.C. 20548: 

Public Affairs: 

Paul Anderson, Managing Director, (202) 512-4800 
U.S. Government Accountability Office, 441 G Street NW, Room 7149 
Washington, D.C. 20548: