At Arachnys we are constantly looking for ways of improving our source library to provide better business intelligence worldwide. Most of our customers are banks and other profit-making companies, so we were initially surprised when we were asked about the non-profit sector.
However, we found that being able to navigate the complex non-profit open data landscape is important for investors and investigators. Investors need to be aware of non-profit status because of fundamental risks (think Russia and its vicious crackdown on NGOs as agents of foreign powers, or Sierra Leone with the diversion of charitable funds to pay for mansions and motors, or Egypt with its arbitrary control over all NGOs), and investigators should know about the quirks of the system because in some countries non-profits are subject to heightened disclosure, and are thus easier to find information on. Every analyst should therefore have an awareness of the tools available to help.
Checking the status
Our starting point was that there is value in being able to check a company independently to verify its not-for-profit status. The major challenge our customers face is verifying whether an organisation’s profile is consistent with how it presents itself. It is a straightforward red flag to find that the company cleaning your offices is actually registered as a non-profit, and not paying tax. Conversely, if an organisation claims to be a non-profit it’s important to check. Ordinary consumers are fooled by this all the time, possibly most notoriously (in the UK at least) by Eastern European companies that solicit donations of clothes and then sell them for profit abroad.
How are they registered?
Even finding out whether or not an entity is registered as a non-profit is not trivial. There is large variation in how non-profits are legally defined, registered and regulated in different countries across the world. In some countries registration as a non-profit is obligatory, in others it’s voluntary. In some registration is with the government, in others with an independent body. Many countries post data about non-profits online and others leave it in a dusty filing cabinet. Knowing where to look for information is complex in countries like Namibia, for example, where different legal forms exist for different types of non-profits, which are all registered with different government bodies. Among developed countries things are not necessarily simpler: Japan is still working on an initiative launched in 2007 to simplify the registration of public interest corporations as a single legal type to reduce the administrative burden of managing their former, highly diverse system.
Where can information be found online?
At Arachnys our speciality is electronic and online information, but here too we found that there is significant variation in which countries are good at online disclosure and which are not. In some developed western countries like Sweden and Italy, detailed information is not available online, whereas the NGO Affairs Bureau in Bangladesh has a central registry of all non-profits in the country on its website.
In general, though, there are two different patterns for non-profit registration and verification. First, tax agencies in many countries (US, Canada, Ireland) provide confirmation of non-profit status. Second, some countries (Bangladesh, New Zealand, UK) have specific commissions or government agencies for registering and regulating charities.
What information is available online?
Like in many forms of public data, the US is the most thorough in forcing disclosure of significant quantities of data (and releasing it to the public). As Margot Williams recently wrote in an article for the ICIJ, a great deal of information on US charities can be found on sources such as CitizenAudit.org, Guidestar Service, ProPublica’s Nonprofit Explorer and the IRS list of tax-exempt organisations, each of which fills a different information gap. If you were looking to search which organisations were operating in a certain area such as Somaliland, for example, CitizenAudit provides you the appropriate information:
Clicking on the highlighted document allows you to look at the PDF, which contains a huge amount of detail on the individual organisation’s activities internationally (including, in this case, the fact that the company has paid $150,000 to a foreign foundation in Somaliland to dig water wells, and the names of the organisation’s trustees).
Outside of the US, the general trend is that far less information is available. Many charities operate in a number of different countries, so it can be difficult to build a full picture of their international operations. Some sources, however, usefully identify other countries where a registered charity operates, so an investigator can use that as a starting point to check for registration details in the jurisdictions mentioned. Say I was to look at Care International. From the UK Charity Commission I can find out important information such as where the charity operates, its overall income and spending, and its financial history:
As well as information on the trustees and the other charities they are affiliated with:
Having identified that they operate in Kenya, I can find further information from the Kenyan NGO Coordination Board such as the local address and contact details (see below).
Finding information on non-profits is therefore a surprisingly complex task. What each country makes accessible online is far from being uniform across the board and so research has to be adjusted to what is available. Arachnys’s research team work to stay on top of the evolving regulatory and information landscape in these countries in order to give companies the tools to better understand who they’re working with and steer clear of potential risk. We are currently in the process of integrating existing non-profit resources into our database so that next time our users have a target with a possible non-profit angle, Arachnys can provide appropriate information.
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