Fueled at least partly by the desire to give consumers more insight into how their charitable donations are used, new federal regulations 11 years ago began requiring tax-exempt nonprofits to make public their tax forms detailing where their money comes from and how it is spent. But looking at those forms meant having to contact the Internal Revenue Service, or making an appointment with each nonprofit and looking at the forms in their offices. So, two years ago newer federal regulations were supposed to require nonprofits to actually send out copies of the 990 forms to anyone who requested them. Those regulations have yet to become law, and for all intents and purposes, the drive to make public the finances of nonprofits is fizzling.

"The great majority of people don''t ask for--and really wouldn''t want to see--detailed, or really any financial information," says Michael O''Neill, director of the University of San Francisco''s Institute for Nonprofit Organization Management. "I think people give because they believe in the cause, not because they''ve done any careful evaluation of the balance sheets."

Why should people care about financial disclosure? For one thing, nonprofits that do receive tax-exempt status essentially bypass their share of federal taxes. That means the federal government loses the contribution they would otherwise have to make. For another thing, consumers have a right to know how charities spend their hard-earned dollars, and whether a significant portion of those contributions actually fund charities'' stated purpose. Toward that goal, we''re continuing our scrutiny of local charities that began during the holiday 1996 season This year, we narrowed our focus to a few large, local nonprofits, asked for their 990 forms and analyzed them. Our analysis showed no major mishandling of money, but it did provide plenty of educational fodder for readers interested in learning more about charitable disclosure. We urge the public to become informed donors and to continue to pressure the government and charities for the maximum amount of information about finances. Only then will we truly be getting the most out of our 501 (c) (3) organizations.

Unfortunately, the newest 1997 disclosure laws never went into effect, pending tinkering on the part of the Internal Revenue Service. But besides that, a general trend toward requiring better financial disclosure for nonprofits hasn''t necessarily resulted in greater interest in the subject--either on the part of nonprofits or on the part of the donors who support them.

"So far, [the new regulations] haven''t changed anything dramatically, but in part that''s because they haven''t fully kicked in," says Stacey Palmer, who edits the Chronicle of Philanthropy, a Washington DC-based trade publication for the nonprofit industry. The Chronicle annually compiles a list of the "Philanthropy 400"--a list of the nation''s largest charities, as well as a salary survey of nonprofit executives. In the course of doing that research, Palmer says her staff asks nonprofits to mail in their 990 forms. Palmer says some nonprofits are already eager to comply with the spirit of the new regulations. "Congress said we want to encourage compliance," she says, "but if we went to court, the nonprofits would win."

Locally, some of that reticence can be seen in the response of some of the county''s largest nonprofits, who were asked to provide Coast Weekly with a copy of their most recently filed 990 forms. Of the 16 organizations we asked to provide the forms, two chose not to respond. However, many of those who did respond did so grudgingly. One nonprofit executive director complained in a letter that a similar survey undertaken by CW two years ago was "mean-spirited." An assistant for another nonprofit executive director admitted that her boss was still "considering" whether to return the form--a form that she herself described as "scary."

Officials at many nonprofits "are very, very afraid that--heaven forbid--something will be taken out of context," says Palmer. "They forget that this is a public document, and that they are asking for money from the public."

"The return is intended to be of interest to someone who is not an accountant or an attorney," says Marcus Owens, director of exempt organizations for the Internal Revenue Service. But, concedes Owens, "it is a long return."

What can a layperson can get from sifting through a 990 form? A basic understanding of where an organization''s money comes from and goes (see sidebar page 26)--with a few provisos. Unfortunately the IRS is "working on a draft of a plain language publication that would explain what a 990''s numbers mean to someone who is not filling it out," says Owens. But alas, the deadline-conscious IRS has no set schedule for releasing such a pamphlet.

For starters, when looking at the local charities whose 990 forms CW requested, it was helpful to keep in mind that different nonprofits serve different functions--and that those functions in turn, yield different sources of revenues and expenditures.

For example, on the revenues side, performing arts organizations, as a general rule of thumb, should show a reasonable percentage of their total revenues coming from "program revenues"--i.e. revenues from the performances they put on. (And indeed, the Carmel Bach Festival showed on its 990 form that 48 percent of its revenues came from ticket sales. The Monterey Jazz Festival derived almost 92 percent of its revenues from ticket sales. On its 990 form, the Monterey County Symphony took in just a little over 20 percent of its listed revenues from ticket sales--although the Symphony showed a higher percentage of revenues coming from fundraising than the other two arts organizations.)

By contrast, an organization like the Economic Development Corporation of Monterey County--which has the stated goal of increasing local employment--showed on its 990 form a heavy reliance on government grants (48 percent of the year''s contributions). Of the medical-type nonprofits, neither Community Hospital of the Monterey Peninsula (CHOMP) or Salinas Valley Memorial Hospital Foundation showed revenues coming from government grants. The Natividad Medical Foundation (which lists itself as a separate "nonprofit, non-governmental organization separately incorporated from the Natividad Medical Center" and designed to "supplement--not replace--public tax dollars)" got nearly 51 percent of its Fiscal Year 1997 revenues from government grants. Interestingly enough, Planned Parenthood Mar Monte, which has 40 clinics in 40 counties, got just under 10 percent of its total 1997 revenues from government grants, deriving nearly 68 percent of its revenue from the medical services the organization provides. (Both the 990s for Natividad and Salinas Valley, because they represented foundations rather than the hospitals themselves, showed nothing under program revenues.)

Many of the organizations we surveyed also showed nothing under "indirect public support"--a category reserved for revenues coming from another nonprofit entity. But some--including CHOMP, Salinas Valley Memorial Hospital, the Monterey Institute of International Studies (MIIS) and the Carmel Bach Festival Inc. (which is supported by the separate Carmel Bach Festival Foundation)--did show revenue in that category. For some nonprofits--like the Monterey Bay Aquarium--dues were a source of revenue. And some organizations, among them the Aquarium and Community Foundation For Monterey County, had investments help make up the bottom line.

All that variety makes for differences--and difficulties--in comparisons between 990s--an issue that nonprofit officials are only too happy to point out.

"In my teaching and my consulting, what I find is every organization thinks they are unique," says Tom Courtney, the CEO of the Yosemite Institute who also teaches classes in nonprofit finance at USF''s Institute for Nonprofit Organization Management. "It''s true, so there''s a limit to the validity of doing comparisons, but that does not negate the validity of comparisons completely."

When it comes to how an organization spends its money, there are some standards that are generally accepted in the nonprofit world.

The long-established National Charities Information Bureau''s (NCIB) own standard is that 60 percent of a nonprofit''s expenses should go toward "program services"--i.e., to providing whatever service the nonprofit has taken as its mission. (To check that percentage, compare Line 13 of an organization''s 990 "program services" with Line 17 "total expenses." Line 13 should be 60 percent of Line 17. See "Tips for Reading 990s," page 26#). Robert Bothwell, president of the National Committee for Responsive Philanthropy, thinks a 50-60 percent guideline makes sense, and points out that the NCIB and the Better Business Bureau arrived at those percentage guidelines "after a lot of study."

All of the local nonprofits surveyed by Coast Weekly easily kept operational expenses within those recommended guidelines. But experts on nonprofit operations say members of the public need to understand that the cost of running a nonprofit and soliciting donations may vary greatly from organization to organization. A hospital, for example, may have big bills for construction and expansion, and will certainly list on its 990 forms surgeons and specialists among its highest paid employees who are bringing in way more money than would employees at other local nonprofits.

"Oftentimes, an organization that is doing door-to-door solicitation or a lot of phone solicitation, their fund-raising costs might be higher," explains Courtney, "while an organization that''s running on government grants or contracts with government entities may have lower fund-raising costs."

Salaries paid out by a nonprofit are always interesting to check out. Total salaries for "officers, directors, trustees and other key employees" can be found In Part Line 25 of the 990. All other salaries for the organization can be found on line 26. Details for compensation paid to officers are listed in Part V by position, whereas details of all employees other than those listed on Line 25 can be found on Part 1 of Schedule A. Schedule A also lists independent contracts paid in excess of $50,000

How much is too much when it comes to salaries? That''s another issue that''s debated in nonprofit circles.

"There are people who actually believe that the head of a charity should not be paid," says Dan Langan, an NCIB spokesperson. Langan recalls that several years ago, the city of Philadelphia considered--and rejected--a plan to take away tax-exempt status on nonprofits paying their executive director more than $100,000 a year.

He also points to the example of Elizabeth Dole, who he says is pulling down more than twice that amount to operate the Red Cross--a billion-dollar-a-year nonprofit. "If she were running a billion-dollar- a-year, for-profit corporation, she would be paid much more than that," he says.

"You definitely have to look at your values before looking at the [990] form," says Palmer. "Some people think charitable officers who are paid $200,000 is an awful thought. Other people think that''s the way you get a professional to run the organization."

Locally, at least among the organizations we surveyed, it didn''t appear that employee salaries were excessive. In most cases, the total proportion for employee compensation stayed below 50 percent of the organization''s total expenses--and that''s even a little low for the nonprofit industry, says Courtney. "Because most organizations are in the service business--and they perform those services through people--personnel costs including salary and benefits will probably account for about two-thirds of the organizations expenses."

The salaries of top executive directors also seemed pretty unremarkable on the local level, with most local executive directors in the organizations we surveyed getting paid in the $40,000-$60,000 a year range. The exceptions tend to be in large organizations like MIIS and the Monterey Bay Aquarium, although hospitals and medical foundations can also show directors with large salaries--and oftentimes those directors are doctors and medical specialists. Likewise, hospitals and hospital foundations are more likely to show big pay-outs under the 990 Schedule A Part II, --"Compensation of the Five Highest Paid Independent Contractors" than other types of organizations--particularly if they''re contracting with top-dollar surgeons or big contractors involved in capital projects.

Theoretically, 990 forms are supposed to standardize how nonprofits report their operations to the IRS. But Langan says they have not done that--a point that our own research bore out. For example, the 1997 990 return filed by the Salinas Valley Memorial Hospital Foundation contained several glaring errors, including a $440,000 fundraising expense that was tallied in management costs as a "special fundraising costs" instead of being shown in the column for fundraising expenditures. Director of Foundation Barbara Venner, who prepared the 990 form, says Coast Weekly got a bad copy of one part of the return that the foundation didn''t submit to the IRS, but she conceded that there was still an error on the first page of the return that was submitted. The chart on page 25 reflects the foundation''s revised form.)

"The 990 is a small tool that is often inaccurate," says Langan, who cites national studies that show that as many as half of the 990 forms filed with the IRS may be inaccurate or missing crucial information "frequently compensation of top employees."

And, despite the fact that the 990 is a tax form, there appears--as is so often the case with returns--some pieces of information that appear to be open to creative interpretation. For example, is a mailer that gives the five warning signs of a particular form of cancer--and then goes on to solicit funds--charged off to educational efforts or fund-raising?

Some nonprofit advocates say the complexity of reporting requirements may simply be overwhelming--particularly to smaller, community-based groups focused on their main mission.

"You have to remember that accountability is not the first thing on every nonprofit [official''s] mind," says Allison Brody, director of communications for Philanthropic Research Incorporated, a Virginia-based organization that runs www.guidestar.org, a cyber posting of nonprofits and 990 forms that is expected to meet Internal Revenue Service (IRS) requirements for public access to 990s. "They''re thinking about their work. If there''s a community action network that just got the information faxed over about their Christmas basket family, then they''re thinking about that family and whether they''re going to eat."

But, considering the fact that there are now an estimated 1.5 million nonprofits of all kinds enjoying tax-exempt status--reporting on where those tax-exempt funds go may just be part of the breaks.

"I think there is going to be more exposure of the data on 990s," says Courtney, who predicts that Web access to nonprofit tax information could well fuel the trend. "Regulations are going to require that we share this information." cw