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Listener research: The Rights of, and Public Information Available to, the Funders of Listener-Sponsored Media

This paper got buried for a few months, but now surfaces
- editor, wbai.net [ webworker@wbai.net ]


From: smithy@mindspring.com
To: webmaster@wbai.net
Cc: info@wbai.net
Sent: Thursday, May 15, 2003 11:22 AM
Subject: Update/Follow-Up: Fw: Report & Tips on Transparency Issues at Pacifica and DN

Here's an important update from the information I sent you last night. I spoke with the New York Attorney General's office this morning and they were following up on the Democracy Now issues for me, since DN wasnt responding to me. They were able to find out that DN does have a tax exempt letter and the Attorney General is sending it to me. Also they asked DN about why they were not registered with the New York Attorney General and apparently that registration is now "in the mail".

Accordingly I have updated my "Report" (attached), as I don't want to be making any incorrect accusations.

Thanks, Smithy

Hello there,

I ocassionally get information from your site about the goings on at Pacifica and DN, as I have been trying to track down some of their financial & other information for some time. I have been gathering reports and documents from the IRS and New York Attorney General's office about these organizations.

Anyway, based on the work I have been doing to get some governance and financial information about these organizations, I put together the following report that I hope will also be helpful to other listener-sponsors who are active in the pursuit of transparency. I attached the full report in both HTML and Word format and am hoping you will be able to post it to your web site. It is meant mostly as an educational document for other listener-sponsors. My name is "Smithy" - Spooner and Adelson know who I am, in case you think I am a random stranger. Let me know if you need more info. & if you can post the full report to WBAI.net.

The Report is called: "The Rights of, and Public Information Available to, the Funders of Listener-Sponsored Media".

Thanks, Smithy

PS: You do good work!


The Rights of, and Public Information Available to, the Funders of Listener-Sponsored Media

In this report, I discuss laws and other controls governing fiscal responsibility and transparency of non-profit organizations such as listener-sponsored media outlets, particularly as they relate to the Pacifica Foundation and Democracy Now!

In the concerns I have seen about financial transparency at these two organizations, it has become clear that a lot of people are not aware of the regulatory or other "watchdog" bodies they can go to, in order to seek information or make complaints where there are transparency problems. For this purpose, it is helpful to have an overview of the relevant state and federal laws, what reports are required to be filed by these organizations, what is and isn't public information, and what you can do if the organization is not complying with relevant public disclosure laws. It is also helpful to know more about various "charity watch" groups.

This report is divided into the following sections:

  1. IRS Rules Governing Tax Exempt Organizations and Relevant Public Documents (Forms 990 and 1023)
  2. State Laws Governing Non-Profit Organizations that Solicit Funds from the Public and Relevant Public Documents (Registration Forms and Annual Filings)
  3. Other Forms of Accountability to the Public and Things to Look for in the Financials
  4. Trends in the Regulation of Non-Profit Organizations


(1) IRS Rules Governing Tax Exempt Organizations and Relevant Public Documents (Forms 990 and 1023)

At the federal level there are the more well known IRS (Internal Revenue Service) rules governing the reporting requirements of tax-exempt organizations. These help to make the governance and finances of tax exempt organizations more transparent.

The first step in establishing the legitimacy of an organization claiming to be tax exempt is to make sure it actually is tax exempt. I like to use GuideStar first. This is located at:


For example you can get the Pacifica Foundation information at:


Hopefully, their 2002 Form 990 Report will materialize on this site soon.

If you can't find the organization on GuideStar, you can try "IRS Publication 78", a searchable database of tax-exempt organizations:

http://www.irs.gov/charities/article/0,,id=96136,00.html and click the "Search Now" link.

Or you can call the IRS at 1-877-829-5500 and talk to a real person and get them to check on the status of an organization that claims to be tax exempt.

For example, as of May 14, 2003 the IRS claims they do not have any records in their database showing that Democracy Now! is a tax exempt organization, even though DN! claims to be one at their web site at http://www.democracynow.org/donate.html. You can double-check this by asking DN! for their EIN (Employer Identification Number), and going back to the IRS with this EIN to do another search. Or you can simply ask DN! for a copy of their exemption letter. Good Luck! So far DN has never responded to any of my questions about their tax status.

In the end I decided to get the New York Attorney General's office to do the asking. Amazingly, they were able to get an answer! And all is well. EIN = 01-0708733, and they are sending me the tax exemption letter.

If an organization does turn out to be a proper tax exempt organization then, under the Internal Revenue Code (specifically, Section 6104), a whole bunch of information becomes publicly available for your perusal, even before they file their first 990 Annual Report. Fantastic!

The two good pieces of information you can get as soon as an organization becomes tax exempt are:

  1. A Copy of their Letter of Exemption from the IRS, and
  2. A Copy of the organization's IRS Form 1023 application for exemption.
  3. Form 1023 has lots of governance and financial information. You can see what it looks like by following this link: http://www.irs.gov/pub/irs-pdf/k1023.pdf

    Under Internal Revenue Code Section 6104, most 501(c)(3) organizations are required to furnish you a copy of their Form 1023 and tax exemption letter the very same day if you just show up at their doorstep, and within 30 days if you make a written request (snail mail, fax, courier or email). The same rules apply to public disclosure of Form 990 filings.

    The following page at the IRS provides very useful information about your rights to access these documents from a 501(c)(3) such as the Pacifica Foundation or Democracy Now!:


    If the organization does not comply with your request in the stated timeframe, you can submit a complaint to the IRS, or just get the form(s) directly from the IRS, as described here:



    (2) State Laws Governing Non-Profit Organizations that Solicit Funds from the Public and Relevant Public Documents (Registration Forms and Annual Filings)

    These less well known laws and requirements can also provide you with a bunch of information that is extremely handy and helps to keep the governing bodies of non-profits honest.

    These state regulations and associated reporting requirements apply in addition to the rules under the Internal Revenue Code. These state rules generally apply to any organization that solicits funds from the public in the relevant state. They are designed to protect the public from misleading and fraudulent solicitations.

    For example, while the Pacifica Foundation does not have a radio station in the State of New Jersey, its signal does reach there and so it solicits funds there during its fund drives. Therefore it needs to register and file annually in the State of New Jersey.

    Lately, I have been having a lot of fun trying to track down the relevant filings of the Pacifica Foundation and Democracy Now! with the regulator of charitable organizations in the State of New York. The relevant regulator here is the New York Attorney General's Office, specifically the Charities Bureau.

    You can get lots of information about the state reporting requirements and rules governing organizations soliciting funds in the State of New York at:


    The relevant law that talks about all registration and reporting requirements is "Article 7-A of the Executive Law - Solicitation and Collection of Funds for Charitable Purposes" and you can find it here: http://www.oag.state.ny.us/charities/solicitation_booklet.pdf

    Similar to the IRS rules, the main registration forms and annual filings are public documents that any charitable organization is required to supply to a member of the public requesting them. Alternatively, if you have problems getting these documents out of a charitable organization itself, you can make a Freedom of Information Request directly to the Attorney General's Office using the following form: http://www.oag.state.ny.us/charities/char007.pdf

    They seem to respond within a week about whether or not an organization is registered with them and telling you it will take a few weeks to process your full request.

    For example, here is the response I got from the Attorney General's Office when I made a FOI request about the Pacifica Foundation, Democracy Now! and the Institute for Media Analysis (used as a "conduit" by both the Pacifica Campaign and Democracy Now! for a very long time):

    http://www.wizardsofmoney.org/pac/dn.pdf (it's a big file. Sorry about that)

    Interestingly, Democracy Now! is not registered with the New York Attorney General to solicit contributions in NY, despite being domiciled as a corporation in NY and its 1.5 years of extensive solicitation efforts in this state. However the NY Attorney General's office informs me that they contacted DN! about this and the registration application is "in the mail". Phew! Pacifica and IMA get a gold star for being already registered.

    But only IMA gets a gold star for bothering to file its annual reports with the Charities Bureau in the past few years. Here's an interesting letter I recently got a copy of, from the New York Charities Bureau about the Pacifica Foundation's failure to file for the year's 2001 and 2002.

    http://www.wizardsofmoney.org/pac/wbai.pdf (also a large file)

    Technically, the Pacifica Foundation lost its license to solicit funds in New York. Undeterred by this, it proceeded "full steam ahead" with its WBAI fund drive starting this past Monday, May 12th.

    To the Pacifica Foundation's credit, however, I have spoken to the CFO, Lonnie Hicks and he has assured me they are responding fully and immediately to this letter from the Attorney General's office. This proves to me that getting such documents from the regulators can be very helpful in getting a response on financial issues out of these organizations. Before I had this letter in my hot little hands nobody would ever even bother to respond to my fiscal concerns (except Spooner).

    In the worst cases, where you really can't get a response out of an organization soliciting funds in your state or if, say, you think they are lying about their tax exempt status, or otherwise misleading the public or not complying with state disclosure & registration laws, you can file a complaint with the regulator. For example, in the State of New York, you can use this form:


    If you live in other states, you can deal with that state's particular regulatory body.

    Here is a handy list of all the state regulators that regulate organizations that solicit funds from the public: http://www.give.org/links/govregs.asp

    New Jersey and New York are some of the more strict regulators of non-profits soliciting funds from the public, so they can be good places to start your inquiries about multi-state operators. California is also way up there, and Texas is no use at all - they just about let anyone do anything on the financial front!

  4. Other Forms of Accountability to the Public and Things to Look for in the Financials
  5. The Better Business Bureau "Wise Giving Alliance" at http://www.give.org/ provides very useful reports on charities and gives them extra points for good financial and disclosure behavior. In the Charity Reports Section, you can get reports about organizations you are curious about.


    according to the CBBB "Standards for Charitable Solicitations" http://www.give.org/standards/cbbbstds.asp

    For example, the Rain Forest Action Network meets the CBBB Standards in this report:


    and the now disgraced "Nature Conservancy" report is appropriately "unavailable" at this time.

    The Wise Giving Alliance takes requests for organizations that people want to see a report written about. So if enough people asked them to do a report on Pacifica and Democracy Now, they would go ahead and write a report on whether or not these organizations meet the CBBB "Standards for Charitable Solicitations".

    The CBBB "Standards for Charitable Solicitations" are an excellent guide for any listener-sponsor who wants to understand some basic things about the finances of their favorite community media outlet. Most of the financial tests are based on information in the Form 990. For example, two key ratios are:

    Program Services / Total Expenses should be greater than 65% (E.g: In the past 4 years, Pacifica has not passed this test - coming in at 37% (2001), 48%(2000), 53%(99), 56%(98)), and

    Fundraising Expenses / Total Expenses should be less than 35%.

    A public report by the CBBB Wise Giving Alliance on an organization is also a great way to put pressure on your favorite organization to clean up some of its less desirable fiscal and (non) disclosure practices.

  6. Trends in the Regulation of Non-Profit Organizations

Increasingly at the Federal and State levels, regulation of non-profit organizations that solicit funds from the public is tightening up. For example, the New York laws just got tougher this year and the IRS public disclosure laws pertaining to 990 and 1023 filings are also just a few years old.

The use of web sites like GuideStar and Give.org to check on such organizations is growing exponentially. Listener-sponsors of community media, who care about financial and governance transparency, should take this opportunity to exert pressure on their favorite community media service to clean up its act on the fiscal and disclosure side. They owe it to their funding base!

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