Are 501(c)(3) Financial Records Public?

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 29, 2023

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Are 501(c)(3) Financial Records Public?

Yes, 501(c)(3) financial records are public information. A 501(c)(3) organization is required to provide information on salaries and other financial statements to the IRS through form 990, which is required to be published by the IRS regularly.

Who Can Access 501(c)(3) Financial Records?

501(c)(3) financial records are subject to public disclosure requirements. This means that any member of the public can request and receive copies of an organization's financial records. However, some exceptions to public disclosure exist.

For example, organizations may redact certain sensitive information, such as donor names and addresses, to protect their privacy.

Process for Requesting 501(c)(3) Financial Records

The process for requesting financial records varies by state. In most cases, individuals must submit a formal request in writing to the organization. The request must specify the records being sought and provide the name and address of the requester.

Organizations have a set time period, usually, 30 days, to respond to the request. If the organization denies the request, the requester may appeal the decision and seek a court order to compel disclosure.

Why Do Stakeholders Want to Access 501(c)(3) Financial Records?

There are several reasons why stakeholders may want to access 501(c)(3) financial records.

Reasons Why Stakeholders May Want to Access 501(c)(3) Financial Records

Transparency

Transparency is critical to building trust between nonprofits and their stakeholders. By making their financial records publicly available, nonprofits can demonstrate their commitment to transparency and accountability.

Stakeholders can review financial records to understand how organizations are spending their resources and to evaluate their effectiveness in achieving their mission.

Accountability

Nonprofits have a responsibility to use their resources in the best interest of their beneficiaries. Financial records can provide stakeholders with insight into an organization's financial management practices, including how it is using donations and other resources.

By holding nonprofits accountable for their financial decisions, stakeholders can help ensure that resources are being used effectively to achieve the organization's mission.

Evaluation of Effectiveness

Nonprofits exist to address social, environmental, and humanitarian challenges. Financial records can help stakeholders evaluate an organization's effectiveness in achieving its mission.

By reviewing an organization's financial records, stakeholders can determine if the organization is making progress toward its goals and if it is using its resources effectively.

Case Studies

Several high-profile cases illustrate the importance of financial record-keeping and transparency for 501(c)(3) organizations.

One example is the case of the National Heritage Foundation (NHF), a nonprofit organization that claims to support charities and conservation efforts.

In 2017, the Washington Post conducted an investigation into NHF's financial practices and found that the organization was operating as a pass-through for questionable charities.

NHF was collecting millions of dollars in donations and then funneling the money to other organizations that were not qualified to receive tax-exempt status.

NHF was also paying large salaries to its top executives while giving little to nothing to the charities it claimed to support. The investigation led to NHF's revocation of tax-exempt status and a $1.7 million penalty.

Implications for Transparency and Accountability

The cases of NHF illustrate the importance of financial record-keeping and transparency for 501(c)(3) organizations. Nonprofits have a responsibility to use their resources in the best interest of their beneficiaries.

By maintaining accurate financial records and making them publicly available, nonprofits can demonstrate their commitment to transparency and accountability.

Stakeholders can review financial records to evaluate an organization's effectiveness in achieving its mission and to hold the organization accountable for its financial decisions.

Conclusion

501(c)(3) organizations play an essential role in addressing social, environmental, and humanitarian challenges. However, with great power comes great responsibility.

501(c)(3) organizations must comply with strict financial record-keeping requirements, and their financial records are subject to public scrutiny. While the public disclosure of financial records may seem daunting, it is essential for building trust between nonprofits and their stakeholders.

By maintaining accurate financial records and making them publicly available, nonprofits can demonstrate their commitment to transparency and accountability.

Stakeholders can use financial records to evaluate an organization's effectiveness in achieving its mission and to hold the organization accountable for its financial decisions.

Ultimately, financial record-keeping and transparency are critical to the success of 501(c)(3) organizations and their ability to address social, environmental, and humanitarian challenges.

Are 501(c)(3) Financial Records Public? FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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