Stevens Strategy Blog

You may have already heard that the Internal Revenue Service (IRS) has proposed a substantial revision of the Form 990 that most nonprofit colleges and universities are required to file annually in order to disclose operational and financial information to both the IRS and these institutions' stakeholders. The expansion and breadth of the information requested in the proposed Form 990 has caused organizations like Guidestar, the Association of Governing Boards (AGB), and Independent Sector (IS) to object. These organizations have raised concerns about over-regulation and frustrations regarding whether the wrong questions are being asked, or the right questions are being asked in the wrong way.

Having sat through literally hundreds of board meetings as a college trustee, hospital trustee and college president, I've lost track of the times I've heard that "this place needs to be run more like a business". But in my private business experience, I've also seen business organizations that were the height of disorganization and inefficiency. I would cringe at the thought of these businesses being the model for good business practices. In the spirit of full disclosure, I must admit in one or two situations when I was leading the business, I was one of the contributing parties to the disarray! As I've pondered this question, I've come to this non-controversial conclusion: Tax-exempt entities (I hate the term non-profit, as I believe it becomes a guiding principle and self-fulfilling prophecy for many organizations) are on one hand guided by a mission that rises above the issue of simply making a profit, yet they would benefit from some business practices often adopted by profit making firms.