Comprehensive, timely, or accessible? When it comes to nonprofit data, researchers often have to pick data that satisfy two of those three criteria (at best). But emerging sources of private-sector data could change the public research landscape for the better, as we explore in a recent report.
The limitations of current nonprofit data sources
The Internal Revenue Service (IRS) Form 990 is the standard source for US nonprofit data. To maintain their tax-exempt status, all US nonprofits must file annually with the IRS and make these filings publicly available upon request.
Online tools like the Foundation Center’s 990 Finder make finding information for a single organization easy. But to get information on the whole sector, one has to wait for the IRS to process this information and release it in bulk. This takes time—as of this writing, the most recent detailed data the IRS has released refer to nonprofit financial activity largely from 2016 (i.e., returns the IRS received in 2017). In other words, these data are comprehensive, but not timely.
And because the Form 990 reflects the filing organization’s annual finances, no data derived from the Form 990 can speak to short-term spikes or downturns in charitable giving or to individual transactions for a particular cause.
Most of the information we have about short-term giving comes from organizations voluntarily disclosing that information, like when one Texas nonprofit reported raising more than $20 million to reunite immigrant families separated in the US. Comprehensive data to answer timely questions are inaccessible in most cases.
Enter data philanthropy
What about other potential data sources? Private-sector data can help policymakers streamline and accelerate research for the public good. The emerging field of data philanthropy shows that public-minded private businesses can apply their unique data insights to community challenges. Through a variety of different pathways, private businesses can fill knowledge gaps and answer new questions.
The Urban Institute partnered with the Mastercard Center for Inclusive Growth to explore how Mastercard’s data insights could generate timely and comprehensive answers to sector-wide policy questions. The Center provided Urban limited access to aggregated and anonymized transaction data–driven insights subject to robust privacy and data protection safeguards—relating to nonprofit recipients—which Urban benchmarked against other standard sources of nonprofit data.
We found that the Mastercard data insights were largely in line with other sources on charitable giving, including data from the National Center for Charitable Statistics (NCCS) and the Giving USA Foundation.
Annual giving by subsector was roughly equivalent across the three sources, both within a single year and in year-to-year growth, with Mastercard data insights varying notably in a couple of subsectors. This is plausible, given the inherent distinction between financial transaction data and annual tax data. Subsectors that rely more heavily on electronic payments, giving from individuals, or fees for services might be represented more heavily in the Mastercard data insights than in the Giving USA or NCCS data.
The Mastercard data insights have limitations. Notably, they reflect only electronic payments made on the Mastercard network, and they include all transactions made to charitable entities, including fees for services. But the overall results show that aggregated and anonymized financial transaction data could approximate other public sources of data and provide timelier answers to public concerns.
The Mastercard Center for Inclusive Growth is leveraging Mastercard’s data insights to write public reports covering time-bounded topics like disaster-related giving associated with Hurricanes Harvey and Irma that would be difficult to address with existing public resources.
In our report, we explored how financial transaction data could provide new insights unavailable through Form 990 data, such as information on average donations or daily giving patterns (including around charitable events such as Giving Tuesday).
Organizations like Mastercard are leveraging their private data for the public good by engaging in data philanthropy. By making their data more open to the public, private businesses can ensure the sector gets the timely, comprehensive, and accessible answers it needs.
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The Urban Institute podcast, Evidence in Action, inspires changemakers to lead with evidence and act with equity. Co-hosted by Urban President Sarah Rosen Wartell and Executive Vice President Kimberlyn Leary, every episode features in-depth discussions with experts and leaders on topics ranging from how to advance equity, to designing innovative solutions that achieve community impact, to what it means to practice evidence-based leadership.