WSJ: New IRS Rules Help Donors Vet Charities

Today's Wall Street Journal:  New IRS Rules Help Donors Vet Charities; Revised Tax Form Will Make Nonprofits Reveal More About How They Spend, by Mike Spector:

Americans searching for the best places to make charitable donations are about to get more help from the federal government. The IRS, the tax agency that serves as the main regulator of nonprofits, is ramping up efforts to increase charities' transparency as donors clamor for better tools to evaluate how their money is spent. The first tangible signs of reform are happening now, as charities' annual tax form -- known as Form 990 -- gets a makeover for the first time in nearly 20 years. The changes promise to provide potential donors with a standardized, one-stop shop for information on charities amid a sea of varied nonprofit watchdog Web sites. Charities begin using the new form next year, when they report their 2008 information.

The form, which nonprofits must continue to make available to donors and others on request, will now include a top summary page listing comparative financial information -- revenues and expenses -- over a two-year period. The next page requires charities to detail their organization's accomplishments during the past year, moving that information closer to the front of the form than before. Other sections ask charities to provide more-detailed information about fund raising, governance and compensation for top executives and trustees.