NCCS-GuideStar NASCOnet E-Filing Update

1. NCCS-GuideStar NASCOnet E-Filing Update May 3, 2006

2. State Charity Registration • 212,000 registrations/renewals • Includes multiple registrations by same charities • 16% of returns are from multi-state filers • Only 4 states with registration/renewal requirements do NOT use the 990 • 84% of state registrations and renewals are in states that REQUIRE or ACCEPT the Form 990 • Growth in public charities filing 990 or EZs averaging nearly 5% per year

3. IRS E-filing Is Here Now • Mandatory at federal level for “large” charities this year ($100 m. assets)* -- 3,000 organizations affected • Mandatory at federal level for charities next year with $10+ m. assets*, private foundations* -- 7,000+ organizations affected • IRS has created Fed-State Retrieval System for use by states • More software providers each year (7 including CCH & Lacerte (an Intuit subsidiary) • Nearly SEVEN THOUSAND 990s, EZ’s, and extensions received last year. • 2,227 returns filed to date this year. * Mandatory for organizations must complete 250 “returns”:W-2s + 1099s + 941s + 990s

4. Nonprofit E-Filing Chronology • July 1999 – NCCS began e-filing pilot project with IRS & states • Feb. 2004 – IRS goes live with e-filing 990s; NCCS launches 990-EZ Online • July 2004 – NASCOnet XML SuperSchema Project launched with GuideStar • Feb. 2005 – NCCS launches 990 Online • Jan. 2006 – IRS requires largest orgs to e-file, implements Fed-State Retrieval System

5. Current Status • New NCCS 990 Online infrastructure supports multiple states, state-only filings, Fed-State Retrieval System & more • NASCOnet Fed-State Backend System for State Charity Offices • Completed web services system for receipt of 990s & state forms • Completed system for sending receipts & acknowledgements • Next steps: complete testing, complete PDF & database generation • We have completed work on Penn., New York, & Mississippi systems; Colorado nearing completion • Ready to proceed adding states at a much faster pace!

6. Streamlining the Process of Adding More States • Create NASCOnet XML schema (if not already done) (12-24 hours) • Create XML to generate web pages for state forms (50 hours) • Create PDF versions of state forms and XML-to-PDF crosswalk so printed forms can be created (10-20 hours) • Work with state to define payment options, “business rules” for acceptance & rejection of forms, transmission methods & integration with existing state systems • Install NASCOnet Fed-State backend • If needed, customize system for integrating e-filed data into existing state database

7. Alternative Futures • More paper – ½ of state charity offices’ budgets spent on processing paper • State-specific imaging & registration systems • Our preference: Take advantage of IRS Fed-State Retrieval System, NASCOnet XML Schema & Backend to build a system that meets federal and multiple state needs • Easier for regulators, easier for charities to comply, better data • 32 states require 990 data as well as state forms • Immediate quality improvement • Data in electronic format, ready for use

8. About GuideStar • Founded in 1984 • More than 20,000 visitors each day to website • “Backbone” of a more efficient sector

9. About NCCS • National Center for Charitable Statistics at the Urban Institute • Improving nonprofit data and data standards since 1980s • From Form 990 content & instructions to programming for states to use Fed-state retrieval system

10. How Information Flows in IRS Fed-State System Charity or Tax Preparer Using commercial tax prep software (CCH, Intuit, etc.) or NCCS Online tax prep. systems State Charity Office1. Standard XML 2. Standard Access/SQL Server tables 3. State custom registration mgt database IRS Fed-State RetrievalXML (commercial)XML & PDF & some State Forms (NCCS) NCCS State formsXML & PDF forms

11. How Information Flows within the State Charity Office NASCOnet Back-End1. Receives standard XML 990 data from IRS 2. Converts to standard Access/SQL Server tables3. Manage & send receipt & acknowledgement messages back through IRS to preparers • Customization (Optional) • 1. . Convert either XML or standard database to SCO database • Add log entries • Add or update annual data • Update (or add if accepting NEW registrations) Current Charity Office Registration Database1. Entity data (org. name, address, etc.)2. Annual data (financial, fundraising, etc.)3. Transaction logs (payments due & received, correspondence, etc.) Standard 990 Database Use any of 1500+ fields in database to identify missing registrants, professional fundraising activities, etc.

12. 990 Online:A“TurboTax” for Nonprofits • Web-based system for preparing Form 990 and e-filing with IRS • More than 10,000 returns created, 4,000 transmitted – nearly 1/3rd of IRS 990, EZ & extension forms • Free and easy to use • Drop-down menus, calendars for selecting items & dates • Program takes care of all arithmetic • Verifies that all required items are included • Context-sensitive links to IRS help and expert tips • No duplication of entries: Questions are asked only once

13. http://efile.form990.org

14. 990s, EZs, Extensions…Import Information from Last Year’s Return

15. Does All Arithmetic, Ensures Completeness

16. Print, E-File, or Both

17. 990 Online & State Systems • Fully integrates with state forms • State forms populated from 990 data • States can choose to receive: • 990s only • “Linked” 990s & state forms • State forms only If a state is willing, it can permit e-filed state forms only…and our system does NOT require the charity to create the 990.

18. State Registration Online Capabilities

19. Sample Mississippi Page

20. Sample New York Pages

21. Sample New York Page with Context-Specific Help

22. Sample Pennsylvania Page

23. Sample Colorado Page

24. NASCOnet Fed-State Backend System • Designed to meet state needs for using data • Database of all Form 990 data • Select based on criteria determined by state • Display and print pdf of form • Accept data from NCCS AND any other transmitter (CCH, Intuit, etc.)

25. NASCOnet Fed-State Backend System

26. Filter Returns

27. Display Returns

28. Display or Print Adobe PDF

29. Attachments -- View, Print, Analyze (Info in Database)

30. Professional Fundraiser Registration: Pennsylvania & Hawaii

31. NCCS Policy Work • Work with IRS to enforce existing requirements for e-filing and eliminate 250 return threshold • Work with the IRS and states to add key items on Form 990 to make it sufficient for state charitable renewals • Work with states to create a lean Uniform Charity Registration Renewal Form

32. State Approaches to E-filing • CO – Mandatory e-filing • MI – One year created e-filing system for corporate returns; the next year, required e-filing • MI corporate returns represent 25% of those e-filed with IRS

33. Fed-State Retrieval System • Similar to individual tax return system – state IT and dept of revenue already use • Provides data for pickup – then states have minimal programming to incorporate into their individual database systems

34. New Developments • Provides assistance for preparer, like 990 Online

35. The Future • NCCS working on development of web-based Form 1023 – application for tax-exempt status – for IRS • Electronic submission from the beginning -- Form 1023, Form 990, and Request for Extension • Same forms for state and federal use – easy for charity, easy for regulation • Access to greatly improved usable data on sector

36. More on E-filing & Form 990 • Check out 990 Online at http://efile.form990.org • Sign up now for the NASCOnet Backend System • Sign up for us to help you build a state e-filing system