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Exempt Organization Execs' Incomes Up In 1992, GAO Reports.

FEB. 28, 1995

GAO/GGD-95-84BR

DATED FEB. 28, 1995
DOCUMENT ATTRIBUTES
  • Institutional Authors
    General Accounting Office
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    exempt organizations, compensation, officers and directors
    exempt organizations, social welfare
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 95-2992 (72 pages)
  • Tax Analysts Electronic Citation
    95 TNT 53-8
Citations: GAO/GGD-95-84BR
====== SUMMARY ======

Nearly 15 percent of the highest paid executives at 46 of the largest social welfare, labor and agricultural, and business organizations earned more than $200,000 in 1992.

This was one of the findings of a General Accounting Office report released February 28 that examined the compensation, revenues, assets, expenses, and other factors relating to tax-exempt 501(c) organizations. The report focused on 3 of the 25 categories of tax- exempt organizations: social welfare, labor and agricultural, and business. Its findings were based substantially on IRS annual reports as well as Form 990 returns filed by exempt organizations.

The GAO reported that of the 673 executives studied, about 23 percent earned between $100,000 and $200,000, 32 percent received less than $100,000, and 29 percent received no compensation. Business leagues led among two compensation levels: those earning more than $200,000 and those who got nothing.

The biggest salary -- $4.1 million -- went to the commissioner of The PGA Tour Inc., a business league. Mutual of America Life Insurance, a social welfare organization, paid its top executive $1.2 million, while the executive director of the Major League Baseball Players Association was the highest paid officer of a labor or agricultural organization, earning more than $900,000.

IRS examinations of social welfare organizations and business leagues have dropped sharply, the GAO reported. Between fiscal 1990 and 1994, examinations of social welfare organizations fell from 816 to 397 and those of business leagues decreased from 1,500 to 874. However, after an initial decline, examinations of labor and agricultural organizations rose from 560 in fiscal 1992 to 828 in 1994.

The report provided no explanation for the drop off in examinations, though it cited a 1994 House Ways and Means Committee report that recommended increased staffing and funding for IRS examination and compliance activities.

Ironically, though examinations have gone down, taxes and penalties assessed against exempt organizations increased significantly during the same period. Taxes and penalties against social welfare organizations increased from just under $500,000 in 1990 to more than $138 million in 1994. Labor and agricultural organizations faced taxes and penalties of almost $20 million last year, an increase of more than $17 million. Business leagues, though, saw their penalties drop from nearly $4.2 million to just above $1.1 million. Most assessments came from examinations of IRS Form 990T, "Exempt Organization Business Income Tax Return."

Between fiscal 1992 and 1994, the number of social welfare organizations that lost their exemptions declined slightly from 10 to 8, while exemptions were revoked for 14 business leagues in 1994 as opposed to 6 two years before. Under the labor and agricultural category, only two organizations lost exemptions.

The report also found that the number of business leagues is increasing rapidly and bringing in more dollars than social welfare and labor and agricultural organizations.

The GAO found that from 1978 to 1990, the number of exempt organizations increased 27 percent, from 806,375 to 1,022,223. Business leagues posted the biggest gain, 45 percent, while social welfare organizations showed a 14-percent increase. Labor and agricultural organizations, though, declined 18 percent. All three categories were eclipsed by charities, which climbed 67 percent.

Business leagues also showed the most gains in assets. Between 1975 and 1990, assets of business leagues jumped more than 140 percent, from almost $8 billion to more than $19 billion. By contrast, the increases for labor and agricultural and social welfare organizations were 47 percent and 20 percent, respectively. The bulk of the increases for all three categories came from investments in securities.

Similarly, revenues of business leagues rose by nearly 144 percent during the same time, from $7.4 billion to $18 billion. Labor and agricultural organizations saw their revenues rise by a more modest 13 percent, while those of social welfare organizations plunged 47 percent. Program services were the main revenue source for social welfare organizations, while labor and agricultural organizations got most of their income from membership fees. Business leagues raked in more than $7 billion from both sources.

Business leagues also experienced the biggest expense increases, as their costs rose by about 145 percent from 1975 to 1990. For labor and agricultural organizations, the increase was 19 percent, while expenses for social welfare organizations were almost halved. Benefits to or for members, as well as advertising and consulting fees, made up the bulk of expenses.

====== FULL TEXT ======

TAX-EXEMPT ORGANIZATIONS

INFORMATION ON SELECTED TYPES TYPES OF ORGANIZATIONS

General Government Division

B-260138

February 28, 1995

The Honorable Byron L. Dorgan

 

United States Senate

The Honorable Harry Reid

 

United States Senate

Since the mid-1970s, the number and size of organizations that are tax-exempt under Internal Revenue Code (IRC) section 501(c) have increased substantially overall. As of 1992, there were over 1 million of these organizations in existence. /1/

Press reports and congressional hearings have recently focused on the activities of charitable organizations, but other types of tax-exempt organizations have not received this level of scrutiny. As you requested, we (1) determined the growth in the number, assets, revenue, and expenses of social welfare organizations, labor and agricultural organizations, and business leagues, (2) documented the compensation that some of the largest of these tax-exempt organizations paid their executives in 1992, (3) identified the extent to which these organizations can be involved in lobbying and political activities, and (4) identified IRS' efforts to monitor their activities. Information concerning charitable organizations is presented in this report for purposes of comparison.

On February 15, 1995, we briefed you and your staffs on the results of our review. This report summarizes the information presented in that briefing.

RESULTS IN BRIEF

For the most part, the number and size of tax-exempt social welfare organizations, labor and agricultural organizations, and business leagues increased between 1975 and 1990. The changes over this period are illustrated as follows:

o The number of business leagues increased about 45 percent to

 

65,869, while the number of social welfare organizations

 

increased about 14 percent to 142,473. Conversely, the number

 

of labor and agricultural organizations declined about 18

 

percent to 71,653.

o The assets (in 1990 dollars) of all three types of

 

organizations increased. Business leagues' assets increased

 

more than 140 percent to over $19 billion, while those of

 

labor and agricultural organizations increased about 47

 

percent to nearly $14 billion and those of social welfare

 

organizations increased about 20 percent to over $35 billion.

o The change in revenue (in 1990 dollars) varied for these types

 

of organizations. While revenue for business leagues increased

 

nearly 144 percent to $18 billion and revenue for labor and

 

agricultural organizations increased about 13 percent to over

 

$12 billion, the revenue for social welfare organizations

 

declined almost 47 percent to $18 billion.

o The change in expenses (in 1990 dollars) for these

 

organizations also varied. The expenses of business leagues

 

increased about 145 percent to just over $18 billion and those

 

of labor and agricultural organizations increased nearly 19

 

percent to $12.7 billion. Meanwhile, the expenses of social

 

welfare organizations declined about 48 percent to $17.7

 

billion.

We analyzed the organizations' 1992 annual returns to determine the compensation for the 5 highest paid executives from 46 of each of the largest social welfare organizations, labor and agricultural organizations, and business leagues, as measured by the organizations' assets. Of 673 executives identified, we found that 100 executives (about 15 percent) received $200,000 or more in compensation for 1992. Conversely, 198 executives (about 29 percent) received no compensation for 1992.

IRS is responsible for monitoring the activities of tax-exempt organizations through examinations of their annual returns. In general, between 1990 and 1994 examinations of social welfare organizations, labor and agricultural organizations, and business leagues decreased about 30 percent, while the amount of taxes and penalties resulting from these examinations increased about 200 percent. IRS also revoked the tax-exempt status of 67 of these types of organizations between 1992 and 1994.

SCOPE AND METHODOLOGY

To identify changes in the number, assets, income, and expenses of tax-exempt organizations, we reviewed IRS annual reports and studies by its Statistics of Income Division. To portray the changes in the real value of the organizations' assets, income, and expenses, we converted the financial information in these reports, which were available for 1975 and 1990, to 1990 dollars.

To determine the compensation that executives received from social welfare organizations, labor and agricultural organizations, and business leagues, we obtained, and analyzed 285 IRS Form 990 returns -- "Return of Organization Exempt From Income Tax" -- filed by some of the largest of these organizations for tax year 1992, the most recent year available at the time of our review. A Form 990 return contains detailed information about an organization's assets, revenue, and expenses, including the compensation paid to its executives. The return must be filed annually with IRS by organizations with gross receipts that exceed $25,000, and must be made available to the public according to the IRC.

As agreed with you, we sought to obtain the Form 990 returns for tax year 1992 from 50 of each of the largest social welfare organizations and labor and agricultural organizations, as well as from 200 of the largest business leagues. We identified these organizations on the basis of the amount of their assets as recorded in an IRS Exempt Organization Business Master File (EOBMF) containing all active tax-exempt organizations as of March 31, 1994. Of the returns we requested, we received and analyzed 46 returns of social welfare organizations, 46 returns of labor and agricultural organizations, and 193 returns of business leagues. IRS was unable to provide the remaining returns at the time of our request. Appendix III lists those organizations for which we received and analyzed a Form 990 return.

Our analysis included an in-depth review of the section of the returns detailing the compensation that the organizations paid to their executives, including officers, directors, and key employees. We defined compensation to include salary; contributions to employee benefit plans, including deferred compensation; and expense accounts and other allowances /2/ reported on the organizations' returns. Appendix I lists the executives we identified who received $200,000 or more from these types of organizations. We also identified any compensation that executives of these organizations received from related organizations. Appendix II lists the executives we identified who received compensation from related organizations.

To determine the rules governing lobbying and political activities for these three types of organizations, as well as for charitable organizations, we interviewed IRS Exempt Organization Division staff and reviewed IRS guidelines, regulations, and the Internal Revenue Code. To identify IRS' compliance efforts related to these organizations, including the number of examinations, the taxes and penalties that resulted from these examinations, and the number of organizations for which IRS revoked their tax-exemption, we interviewed IRS Exempt Organization Division staff and reviewed Exempt Organization Division annual compliance reports.

We did our review from March 1994 through December 1994 at IRS' national office in accordance with generally accepted government auditing standards.

AGENCY COMMENTS

On February 7, 1995, we discussed a draft of this report with IRS Exempt Organization Division officials at the national office. They basically agreed with the information presented in the report and provided some technical comments that were incorporated as appropriate.

As agreed with you, unless you announce the contents of this briefing report earlier, we plan no further distribution of this report until 15 days from the date of this letter. At that time, we will send copies of this report to various congressional committees, the Commissioner of Internal Revenue, and other interested parties. We will also make copies available to others upon request.

The major contributors to this report are listed in appendix V. Please contact me at (202) 512-9044 if you or your staff have any questions about this briefing report.

Natwar M. Gandhi

 

Associate Director, Tax Policy

 

and Administration

FOOTNOTES

/1/ Appendix IV describes the types of organizations that are tax-exempt under IRC section 501(c).

/2/ These include expense allowances or reimbursements that recipients must report as income on their individual income tax returns.

END OF FOOTNOTES

CONTENTS

LETTER

BRIEFING SECTION INFORMATION ON SELECTED TYPES OF ORGANIZATIONS

Background on Tax-Exempt Organizations

Social Welfare Organizations -- IRC 501(c)(4)

Labor, Agricultural, and Horticultural Organizations -- IRC 501(c)(5)

Business Leagues -- IRC 501(c)(6)

Charitable, Religious and Educational Organizations -- IRC 501(c)(3)

Number of Tax-Exempt Organizations (1978-1990)

Assets of Selected Tax-Exempt Organizations (1975-1990)

Revenues of Selected Tax-Exempt Organizations (1975-1990)

Expenses of Selected Tax-Exempt Organizations (1975-1990)

Inurement of Benefits

Reasonable Compensation

Executive Compensation Paid by Selected Organizations (1992)

Related Organizations

Lobbying and Political Activities

Tax Deductibility of Contributions, Dues and Membership Fees

Process for Obtaining Tax-Exempt Status

IRS Examinations of Tax-Exempt Organizations (FY90-94)

Taxes and Penalties Assessed Against Exempt Orgs. (FY90-94)

Number of Revocations of Tax-Exempt Status (FY92-94)

APPENDIX I -- EXECUTIVES OF SELECTED TAX-EXEMPT ORGANIZATIONS WHO

 

WERE COMPENSATED $200,000 OR MORE IN 1992

APPENDIX II -- EXECUTIVES OF SELECTED TAX-EXEMPT ORGANIZATIONS WHO

 

RECEIVED COMPENSATION FROM RELATED ORGANIZATIONS IN 1992

APPENDIX III -- ASSETS, REVENUES AND EXPENSES OF THE TAX-EXEMPT

 

ORGANIZATIONS INCLUDED IN THIS STUDY

APPENDIX IV -- CATEGORY AND TYPE OF TAX-EXEMPT ORGANIZATIONS UNDER

 

IRC SECTION 501(c)

APPENDIX V -- MAJOR CONTRIBUTORS TO THIS BRIEFING REPORT

Abbreviations

COO Chief Operating Officer

 

EIN Employer Identification Number

 

EOBMF Exempt Organization Business Master File

 

GDP gross domestic product

 

IRC Internal Revenue Code

 

UAW International Union -- United Auto, Aerospace, and Agricultural

 

Workers

INFORMATION ON SELECTED TYPES OF ORGANIZATIONS

GAO: BACKGROUND ON TAX-EXEMPT ORGANIZATIONS

[graph omitted]

Background Information on Tax-Exempt Organizations

Internal Revenue Code (IRC) section 501(c) establishes 25 categories of tax-exempt organizations that enjoy many benefits that for-profit organizations do not. In particular, tax-exempt organizations are required to pay federal income taxes only on unrelated business income. They are also exempt from many state and local taxes. In addition, contributions to charities are deductible from donors' federal income taxes.

Charitable, religious, and educational organizations, tax-exempt under IRC section 501(c)(3), and known collectively as charities, are the largest category. In 1990, of a total of 1,022,223 tax-exempt organizations, /1/ charities represented 489,891 (48 percent). Social welfare organizations represented the second largest category of tax- exempt organization in 1990, totaling 142,473 (14 percent). Labor and agricultural organizations ranked fourth, while business leagues ranked fifth, with totals of 71,653 (7 percent) and 65,896 (about 6 percent), respectively. An additional 252,310 organizations (about 25 percent) were exempt in 1990 under the remaining 21 IRC 501(c) categories.

Overall, tax-exempt organizations have grown in number and size since the mid-1970s. Specifically, the total number of exempt organizations has grown about 27 percent, from 806,375 organizations in 1978 to more than 1 million in 1990. Between 1975 and 1990, the assets of these organizations have grown in real terms over 150 percent to more than $1 trillion, and their revenues have grown over 225 percent to about $560 billion, while the growth in real gross domestic product (GDP) for the United States was 52 percent. As of 1990, tax-exempt organizations accounted for approximately 10 percent of GDP in terms of revenue, up from nearly 6 percent in 1975. Charities alone accounted for about 7 percent of GDP in 1990.

This report focuses on social welfare organizations, labor and agricultural organizations, and business leagues, which are tax- exempt under IRC sections 501(c)(4), (5), and (6), respectively. Specific information concerning charitable organizations has been included for comparison purposes.

GAO

SOCIAL WELFARE ORGANIZATIONS -- IRC 501(c)(4)

o Must be organized and operated exclusively for promotion of

 

social welfare.

o Must promote common good of entire community.

o Examples:

o American Association of Retired Persons,

o Minneapolis Police Relief Association.

Definition and Examples of Social Welfare Organizations

Organizations operated and organized exclusively for the promotion of social welfare, including civic leagues, as well as local associations of employees -- known collectively as social welfare organizations -- are exempt from federal income taxes under IRC section 501(c)(4). The net earnings of such organizations must be used exclusively for charitable, educational, or recreational purposes. An example of an organization operated for the promotion of social welfare is the American Association of Retired Persons. /2/ An example of a local association of employees is the Minneapolis Police Relief Association.

Social welfare organizations must promote the common good and general welfare of the people of the community. Court rulings have further required that a social welfare organization benefit a whole community of people rather than a private group of citizens. For example, in one case the court ruled that a nonprofit corporation formed to acquire and operate a low-cost housing cooperative was not a tax-exempt social welfare organization because, rather than offering a service to the community-at-large, it only provided a service to its members. However, an organization that benefits a private group of citizens can be ruled tax-exempt if it can establish that it also benefits the entire community. For example, IRS has ruled that an organization engaged in the rehabilitation and job placement of its members was tax-exempt because it benefited the community as a whole, even though its membership was limited.

GAO

LABOR, AGRICULTURAL, AND HORTICULTURAL

 

ORGANIZATIONS -- IRC 501(c)(5)

o Must be organized to:

o improve conditions of persons involved in these fields,

o improve their products, or

o develop a higher degree of efficiency in their

 

occupations.

o Examples:

o International Union -- United Auto, Aerospace and

 

Agricultural Workers (UAW),

o Ohio Farm Bureau Federation, Inc.

Definition and Examples of Labor, Agricultural, and Horticultural

 

Organizations

Labor, agricultural, and horticultural organizations -- known collectively as labor and agricultural organizations -- are exempt from federal income taxes under IRC section 501(c)(5). These organizations must have one or more of the following objectives: (1) bettering the conditions of persons engaged in the pursuits of labor, agriculture, or horticulture, (2) improving the grade of their products, or (3) developing a higher degree of efficiency in their respective occupations. In addition, the net earnings of these organizations may not inure to the benefit any of their members. /3/

IRS defines a labor organization as an association of workers who have combined to promote their interests by bargaining collectively with their employers to secure better working conditions, wages, and similar benefits. These organizations are generally composed of employees or representatives of employees, but may also include employers, self-employed persons, and independent contractors. They may provide benefits to their members or members' families in the event of a strike, lockout, death, accident, or similar occurrence. An example of a labor organization is the International Union-United Auto, Aerospace, and Agricultural Workers (UAW).

IRS uses the term agricultural to cover both agricultural and horticultural organizations. IRS defines agriculture as the art or science of cultivating the ground, including the preparation of the soil, the planting of seeds, the raising and harvesting of crops, and the rearing, feeding, and management of livestock, as well as the harvesting of aquatic products. IRS defines horticulture as the cultivation of a garden or orchard, as well as the art or science of growing fruits, vegetables, flowers or ornamental plants. An example of an agricultural organization is the Ohio Farm Bureau Federation, Inc.

GAO

BUSINESS LEAGUES -- IRC 501(c)(6)

o Must promote a common business interest.

o Cannot be organized for profit.

o Examples:

o American Bureau of Shipping,

o American Medical Association,

o Chamber of Commerce of the U.S.A.

Definition and Examples of Business Leagues

Business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues -- known collectively as business leagues -- are exempt from federal income taxes under IRC section 501(c)(6). Business leagues cannot be organized for profit, and no part of their net earnings can inure to the benefit of any private shareholder or individual. Examples of business leagues include the American Bureau of Shipping, the American Medical Association, and the Chamber of Commerce of the U.S.A.

Treasury regulations define a business league as an association of persons having a common business interest whose purpose is to promote that interest. To qualify for tax-exempt status as a business league, an organization cannot engage in a regular business of a kind ordinarily carried on for profit, even if the business is operated on a cooperative basis or produces only sufficient income to be self- sustaining. Furthermore, the organization must work toward improving the business conditions of one or more lines of business rather than performing services for a particular business.

GAO

CHARITABLE, RELIGIOUS AND EDUCATIONAL

 

ORGANIZATIONS -- IRC 501(c)(3)

o Must be organized and operated exclusively for exempt

 

purposes.

o Must benefit the general public.

o Examples:

o Salvation Army,

o American Cancer Society,

o Harvard University.

Definition and Examples of Charities

Organizations operated and organized exclusively for charitable, religious, scientific, testing for public safety, literary, or educational purposes -- known collectively as charities -- are exempt from federal income taxes under IRC section 501(c)(3). Charities must benefit the general public as opposed to benefiting only private individuals or groups. Some activities considered to be charitable include (1) relieving the poor and distressed, (2) advancing religion or education, (3) erecting or maintaining public buildings or monuments, (4) lessening the burdens of government, and (5) eliminating prejudice. Examples of charities are the Salvation Army, the American Cancer Society, and Harvard University. /4/

IRS staff use standards that have evolved over time from both IRS and court rulings when determining whether an organization qualifies as a tax-exempt charity. For example, IRS has determined that an employment agency that operated exclusively to secure employment without charge to the elderly qualified as a charity because it provided services for a segment of the public with limited means. Conversely, IRS has determined that a pharmaceutical service operated by a nonprofit organization was not tax-exempt because, although it provided discount pharmacy services to handicapped and senior citizens, it also provided pharmacy services to the general public. Furthermore, the pharmaceutical service did not provide free or below cost drugs to the poor. As a result, IRS determined that the pharmacy was not operated exclusively for charitable purposes because it was primarily engaged in commercial activity.

GAO

NUMBER OF TAX-EXEMPT ORGANIZATIONS

 

(1978-1990)

[graph omitted]

Number of Tax-Exempt Organizations (1978-1990) /5/

Between 1978 and 1990, the total number of organizations exempt from taxation under IRC section 501(c) increased from 806,375 to 1,022,223, an increase of about 27 percent. During this period, of the three types of organizations that are the focus of this study, business leagues increased the most, about 45 percent, from 45,325 in 1978 to 65,869 in 1990. Social welfare organizations increased nearly 14 percent, from 125,317 in 1978 to 142,473 in 1990. Labor and agricultural organizations declined about 18 percent, decreasing from 87,531 in 1978 to 71,653 in 1990. By comparison, charities increased nearly 67 percent, from 293,947 in 1978 to 489,891 in 1990, while all other tax-exempt organizations combined decreased less than 1 percent, from 254,300 in 1978 to 252,300 in 1990.

GAO

ASSETS OF SELECTED TAX-EXEMPT ORGANIZATIONS

 

(1975-1990)

[graph omitted]

Assets of Selected Tax-Exempt Organizations (1975-1990)

Business leagues' assets increased more percentage-wise than those of social welfare organizations and labor and agricultural organizations between 1975 and 1990, in 1990 dollars. Specifically, business leagues' assets increased over 140 percent, from nearly $8 billion in 1975 to more than $19 billion in 1990. Labor and agricultural organizations' assets increased about 47 percent during this period, from $9.3 billion to $13.7 billion, although the total number of these types of organizations declined. Social welfare organizations' assets increased about 20 percent, from $29.3 billion in 1975 to $35.1 billion in 1990.

Investments in securities comprised the single largest asset category in 1990 for all three types of organizations, including social welfare organizations ($7.4 billion), labor and agricultural organizations ($4.6 billion), and business leagues ($6.2 billion).

GAO

REVENUES OF SELECTED TAX-EXEMPT ORGANIZATIONS

 

(1975-1990)

[graph omitted]

Revenues of Selected Tax-Exempt Organizations (1975 to 1990)

The revenues of business leagues also increased more percentage- wise than those of social welfare organizations or labor and agricultural organizations between 1975 and 1990, in 1990 dollars. The revenues of business leagues increased nearly 144 percent, from $7.4 billion in 1975 to $18 billion in 1990. By contrast, the revenues of labor and agricultural organizations increased about 13 percent during this period, from $10.9 billion to $12.4 billion, while the revenues of social welfare organizations declined about 47 percent, from $33.8 billion to $18 billion.

Revenues from program services and membership fees were the two largest revenue sources for business leagues in 1990, totaling over $7 billion each. Program services are the services provided in carrying out the major objectives of a tax-exempt organization, such as the publication of journals and newsletters. Labor and agricultural organizations received most of their revenues in 1990 -- $7.3 billion -- from membership fees, while social welfare organizations received most of their revenues in 1990 -- $11.5 billion -- from program services.

GAO

EXPENSES OF SELECTED TAX-EXEMPT ORGANIZATIONS

 

(1975-1990)

[graph omitted]

Expenses of Selected Tax-Exempt Organizations (1975-1990)

The expenses of business leagues increased about 145 percent, from $7.4 billion in 1975 to $18.2 in 1990, in 1990 dollars, while the expenses of labor and agricultural organizations increased about 19 percent, from $10.6 billion to $12.7 billion. The expenses of social welfare organizations declined about 48 percent, from $34.2 billion in 1975 to $17.7 billion in 1990.

Benefits paid to or for members, at $5.7 billion, was the largest expense item in 1990 for social welfare organizations, followed closely by "other" expenses at $5.2 billion. "Other" expenses, which included various items, such as advertising and consulting fees, comprised the largest expense category in 1990 for both labor and agricultural organizations and business leagues at $3.3 billion and $7.7 billion, respectively. The second largest expense for these organizations was salaries and wages at $2 billion and $2.9 billion, respectively.

GAO

INUREMENT OF BENEFITS

o Prohibited for charities, labor and agricultural

 

organizations, and business leagues.

o Persons can only receive reasonable payment for goods and

 

services provided.

o Can lead to revocation of exempt status.

o Major determining factor is reasonableness of compensation.

Inurement of Benefits

The Internal Revenue Code prohibits the net earnings of business leagues and charities from inuring to the benefit of any private shareholder or individual, and Treasury regulation section 1.501(c)(5)-1(a)(1) establishes the same prohibition for labor and agricultural organizations. For these organizations, inurement can result in loss of their tax-exempt status. At the present time, there is no similar prohibition for social welfare organizations.

This prohibition generally states that a person can only receive reasonable payment from an organization for goods or services provided. Specifically, inurement exists in several types of circumstances where benefits, such as unreasonable compensation, low or no-interest loans, and personal expenses, flow to an organization's officers, directors, and other "insiders." While there is no absolute measure of inurement, IRS and the courts assess whether the compensation is reasonable for the services provided and if compensation was agreed upon through arms length negotiations.

In a May 1994 report, the Subcommittee on Oversight of the House Committee on Ways and Means concluded that IRS is not appropriately enforcing the current prohibitions on inurement related to its oversight of charities, and recommended that IRS be allowed to invoke an intermediate sanction against any charity that engages in activities resulting in inurement.

REASONABLE COMPENSATION

o Total compensation defined broadly by IRS.

o No absolute limit -- judged on case-by-case basis.

o IRS considers:

o Compensation of executives of similar organizations,

o Executives' responsibilities,

o Whether salary was determined at "arm's length."

Reasonable Compensation

One of IRS' primary measures of whether inurement has occurred is whether compensation paid to an executive is reasonable. For- profit businesses are allowed to deduct from their taxable income a reasonable allowance for salaries or other compensation for personal services rendered. This standard also has been applied to tax-exempt organizations by the courts as one way to determine whether inurement of benefits has taken place.

When deciding whether compensation is reasonable, IRS first must determine the total amount of compensation paid by the organization. Specifically, IRS considers the following to be compensation: (1) salary or wages, (2) contributions to pension and profit sharing plans, (3) unpaid deferred compensation, (4) payment of personal expenses, (5) rents, royalties or fees, and (6) personal use of an organization's property or facilities.

Once IRS determines the total amount of compensation, it then decides whether the compensation is reasonable. IRS has no pre-set limit on reasonable compensation, but judges reasonableness on a case-by-case basis, as do the courts. For example, in one case the courts determined that inurement existed when a college compensated an executive according to a formula based on stock ownership, rather than paying a reasonable amount for services rendered. In another case, IRS determined that a hospital's contract to pay a radiologist a percentage of the gross receipts of the radiology department did not constitute inurement because the agreement was reached through arms length bargaining and the radiologist had no controlling interest in the hospital.

The primary way IRS determines reasonableness is a comparison of compensation paid by similar organizations. IRS also considers the salary history of the individual, his or her responsibilities, the salary scale of employees in general, and the amount of control the individual has in determining his or her own salary.

EXECUTIVE COMPENSATION PAID BY SELECTED ORGANIZATIONS

[figure omitted]

Executive Compensation Paid by Selected Tax-Exempt Organizations

 

(1992) /6/

In 1992, about 62 percent of the highest paid executives of 46 of each of the largest social welfare organizations, labor and agricultural organizations, and business leagues received less than $100,000 in compensation, while nearly 15 percent received $200,000 or more. Specifically, out of a total of 673 executives, including officers, directors, and key employees, identified on the annual returns these organizations filed with IRS, 198 (about 29 percent) received no compensation, 218 (about 32 percent) received from $1 to $100,000, and 157 (about 23 percent) received from $100,000 to $200,000. There were also 100 executives (about 15 percent) who received more than $200,000 in compensation.

Business leagues had both the largest number of executives receiving no compensation as well as those receiving more than $200,000, with 90 and 44, respectively. Labor organizations had the most executives making between $100,000 and $200,000 with 73, while social welfare organizations had the most executives making between $0 and $100,000 with 87.

Of the organizations we reviewed, The PGA Tour, Inc., a business league, paid the highest overall 1992 executive compensation ($4.1 million) to its Commissioner. /7/ The highest compensated executive of a social welfare organization was the Chairman, President, and Chief Executive Officer of the Mutual of America Life Insurance Company who received $1.2 million. The highest compensated officer of a labor or agricultural organization was the Executive Director of the Major League Baseball Players Association who received over $900,000.

RELATED ORGANIZATIONS

o Social welfare organizations could establish a tax-exempt

 

charitable organization.

o Charities could form a tax-exempt social welfare organization.

Related Organizations

A tax-exempt organization may be related to another organization that may be either a tax-exempt or taxable entity. For example, a social welfare organization might establish a tax-exempt charitable affiliate to receive tax deductible contributions, so long as their records show that their finances are kept separate. Conversely, a charitable organization could establish a social welfare organization to carry out lobbying and political activities, so long as the two organizations are separately incorporated, and they can document that contributions made to the charitable organization are not provided to the social welfare organization.

Executives, such as directors and officers, may serve and be compensated by related organizations. Each organization is required to describe its program and financial activities, including any transactions with related organizations, in its annual return filed with IRS. This includes any compensation paid to an executive by a related organization, provided the executive's total compensation is more than $100,000, of which more than $10,000 was provided by the related organization.

Of the 285 organizations we reviewed, 29 reported that their executives met these criteria. The amounts of total related compensation paid to these executives ranged from $12,320 to $711,807 (see app. II).

LOBBYING AND POLITICAL ACTIVITIES

                              Lobbying            Political

 

     Organizations            Activities          Activities

 

     _____________            __________          __________

     Social welfare, labor    Unlimited           Limited

 

     and agricultural, and

 

     business leagues

     Charities                Limited             Prohibited

Lobbying and Political Activities

Lobbying activity involves an attempt to influence legislation through such means as contacting or urging the public to contact a member or employee of a legislative body, or a government official or employee of an executive agency who is in a position to propose, support, oppose, or reject legislation. "Grass-roots" lobbying is an attempt to influence the opinion of the general public concerning legislation.

Lobbying activity is permitted for social welfare organizations, labor and agricultural organizations, and business leagues and can be the primary activity of these types of organizations, providing it relates to their tax-exempt purposes. Certain charities may spend up to a maximum of $1 million annually on lobbying activities, provided that no more than 25 percent of the lobbying expenditures involves "grass-roots" lobbying. Charities that do not elect this lobbying limit may not engage in substantial lobbying activity.

Political activity involves participating or intervening in a political campaign on behalf of or in opposition to a candidate for public office. This type of activity includes the publication or distribution of printed statements and the making of oral statements favoring one candidate over another. /8/

Social welfare organizations, labor and agricultural organizations, and business leagues can engage in political activity, provided it is not the organizations' primary activity. For charities, political activity is generally prohibited. However, nonpartisan voter education, such as disseminating the overall voting record of Members of Congress pertaining to a variety of issues or conducting a "get-out-the-vote" drive, is a permissible activity.

TAX DEDUCTIBILITY OF CONTRIBUTIONS, DUES AND MEMBERSHIP FEES

                                                  Dues and

 

                                                  Membership

 

     Organizations            Contributions       Fees

 

     _____________            _____________       __________

     Social welfare, labor    Not                 Limited

 

     and agricultural, and    deductible

 

     business leagues

     Charities                Limited             Limited

Deductibility of Contributions, Dues, and Membership Fees Paid to

 

Tax-Exempt Organizations

One of the benefits of tax-exempt status is the deductibility of contributions, dues, and membership fees to taxpayers who provide such sources of revenue to tax-exempt organizations. This enables these organizations to raise some of the revenue needed to carry out their tax-exempt purpose.

Contributions to social welfare, labor and agricultural organizations, and business leagues are not tax deductible. Dues and membership fees paid to these organizations are deductible as a business expense, if they are ordinary and necessary for conducting the payor's business. However, the organizations must inform the contributors if any portion of such dues and membership fees is to be used for lobbying, because that portion is not tax deductible to the payors.

Contributions made to charities are tax deductible to the contributors, provided the contributions are not "earmarked" for either political activities or lobbying. Dues and membership fees paid to charities are tax deductible only to the extent that the amount paid is more than the value of any benefits received by the payor.

PROCESS FOR OBTAINING TAX-EXEMPT STATUS

[chart omitted]

An organization must apply for tax-exempt status to the IRS district office responsible for the geographic location in which the organization maintains its principal place of business. /9/ When applying, the organization must submit the following to IRS: (1) a signed application form; (2) an IRS Form 8718, "User Fee for Exempt Organization Determination Letter Request" with the appropriate user fee; (3) IRS Form SS-4, "Application for Employer Identification Number" (EIN) if the organization does not have an EIN; (4) various organizational documents, such as its Articles of Incorporation; (5) a narrative statement of past, present, and proposed activities; and (6) a proposed budget for 2 years for organizations with less than 1 year of operations, and (7) a statement of receipts and expenditures for the current and 3 preceding years, and a balance sheet for the most recent period for ongoing organizations.

IRS district office staff are to review the application package for completeness and determine whether the organization qualifies for tax exemption. If, during the initial screening IRS staff determine that the application package is incomplete, they are to contact the organization to obtain the missing information. Once the application is complete, IRS staff are to conduct a technical screening to determine if the application needs to be reviewed by an Exempt Organization specialist. In general, these specialists review applications that involve unusual circumstances, controversial issues, or contain voluminous attachments. If the specialist has concerns not specifically covered by statute, regulation, Treasury decision, or a ruling published in the Internal Revenue Bulletin, the application must be forwarded to IRS National Office staff for further review. Once the application review has been completed, IRS is to notify the organization with a determination letter.

IRS reviewed more than 57,000 applications for tax exemption in 1992. Of these, IRS approved nearly 44,000 (77 percent) and denied nearly 1,000 (2 percent). An additional 12,000 (21 percent) applications were neither approved nor denied because the organizations either withdrew their application or failed to provide the additional information requested by IRS.

IRS EXAMINATIONS OF TAX-EXEMPT ORGANIZATIONS

 

(FY90-FY94)

[chart omitted]

IRS Examinations of Selected Tax-Exempt Organizations (FY90-FY94)

Between fiscal years 1990 and 1994, the number of IRS' examinations decreased substantially for both social welfare organizations and business leagues, and increased slightly for labor and agricultural organizations. Specifically, examinations of social welfare organizations decreased from 816 in fiscal year 1990 to 397 in fiscal year 1994. During this same period the number of examinations of business leagues decreased from 1500 to 874. Meanwhile, the examinations of labor and agricultural organizations initially decreased from 764 in fiscal year 1990 to 560 in fiscal year 1992, but then subsequently increased to 828 in fiscal year 1994.

We did not attempt to determine the adequacy of IRS' efforts to monitor the activities of these organizations. However, in its May 1994 report, the Subcommittee on Oversight of the House Committee on Ways and Means recommended that IRS increase both the staffing and funding levels allocated for exempt organization examination and compliance activities, particularly related to charities.

TAXES AND PENALTIES ASSESSED AGAINST EXEMPT ORGS.

 

(FY90-94)

[chart omitted]

Taxes and Penalties Assessed Against Selected Tax-Exempt

 

Organizations (FY90-FY94)

While the combined number of examinations of social welfare organizations, labor and agricultural organizations, and business leagues has declined from fiscal year 1990 to fiscal year 1994, the taxes and penalties assessed against these organizations increased greatly during this period. For example, the taxes and penalties assessed against social welfare organizations increased from $484,554 in fiscal year 1990 to over $138 million in fiscal year 1994. During this period, taxes and penalties assessed against labor and agricultural organizations increased from about $2.4 million in fiscal year 1990 to nearly $20 million in fiscal year 1994, while taxes and penalties assessed against business leagues decreased from nearly $4.2 million to just over $1.1 million. A majority of these assessments resulted from examinations of IRS Form 990T, "Exempt Organization Business Income Tax Return. /10/

             NUMBER OF REVOCATIONS OF TAX-EXEMPT STATUS

 

                              (FY92-94)

                                        Fiscal years

 

                                    _____________________

 

          Organizations             1992     1993    1994

          Social welfare              10       16       8

          Labor and agricultural       1        0       1

          Business leagues             6       11      14

Source: IRS Exempt Organizations Division.

Revocations of Tax-Exemption for Selected Organizations

 

(FY92-FY94)

Between fiscal year 1992 and fiscal year 1994, IRS revoked the tax-exemptions of a combined 67 social welfare organizations, labor and agricultural organizations, and business leagues. /11/ IRS revoked the tax exemption of 34 social welfare organizations, 31 business leagues, and 2 labor organizations during this 3-year period. IRS was unable to provide us with the specific reasons for these revocations.

In its May 1994 report, the Subcommittee on Oversight recommended that IRS be required to disclose the reasons for revoking an organization's tax-exempt status. At present, IRS is only required to disclose the name of charities that have had their tax-exemption revoked.

FOOTNOTES

/1/ This total does not include certain 501(c)(3) religious organizations that automatically qualify as tax-exempt and need not apply to IRS for tax-exemption as well as a small number of other organizations that qualify as tax-exempt under other IRC sections.

/2/ We selected examples of the largest IRC section 501(c)(4), (5) and (6) organizations on the basis of their assets.

/3/ This prohibition generally states that a person can only receive reasonable payment from an organization for goods and services provided.

/4/ We selected examples of charities on the basis of the largest amount of charitable donations received.

/5/ Specific data on the number of exempt organizations was not readily available prior to 1978.

/6/ Our compensation figures include all salary, benefits, including deferred compensation, and expense account items that an employee is required to claim on his or her individual income tax return, such as the value of housing, automobiles or other assets owned or leased by the organization. Although our compensation figures are for 1 year, compensation may vary from year to year.

/7/ The examples are presented to illustrate the range of salaries paid by these organizations to their executives. We did not attempt to determine whether or not the compensation was reasonable.

/8/ Tax-exempt organizations may establish separate segregated funds for conducting political activities. Such funds, established under IRC section 527, are tax-exempt as "political organizations provided contributions to the fund are used primarily for political purposes. Due to the strict limitations related to the political activity of charities imposed by IRC section 501(c)(3), a separate segregated fund established by a charity may not be used for political campaign involvement, such as influencing the election of a public official. Social welfare organizations, labor and agricultural organizations, and business leagues have no such limitation.

/9/ In the near future, IRS plans to consolidate its process for determining the tax-exempt status of organizations in one "key" district office.

/10/ Tax exempt organizations must file a separate return and pay income taxes on income over $1,000 that they receive as a result of activities that are not related to their exempt purpose.

/11/ IRS could not provide specific data concerning revocations prior to FY 92.

END OF FOOTNOTES

APPENDIX I

EXECUTIVES OF SELECTED TAX-EXEMPT

 

ORGANIZATIONS WHO WERE COMPENSATED

 

$200,000 OR MORE IN 1992

Organization                    Title                    Compensation

 

_____________________________________________________________________

SOCIAL WELFARE ORGANIZATIONS

American Association of      Executive Director             $323,537

 

Retired Persons

AVMED, Inc.                  President/Director              235,459

 

                             Senior Vice-President/

 

                               Director                      205,390

Blue Cross Blue Shield       President and Chief Executive   777,947

 

Association                    Officer

 

                             Executive Vice-President and    413,091

 

                               Chief Operating Officer (COO)

 

                             Senior Vice-President           221,929

 

                             Senior Vice-President           210,589

 

                             Senior Vice-President           200,960

Connecticare                 Executive Vice-President and    282,794

 

                               Chief Medical Officer

 

                             President and Chief Executive   216,845

 

                               Officer

Higher Education Assistance  President                       220,452

 

Foundation

Independent Health           President                       316,464

 

Association, Inc.            Executive Vice-President        251,865

Marine Spill Response        President                       244,679

 

Corporation                  Vice-President-Operations/      211,137

 

                               General Manager

Midwest Foundation           Chief Executive Officer         380,718

 

Independent Physicians

 

Association                  Chief Medical Officer           241,995

Mutual of America Life       Chairman, President and       1,209,573

 

Insurance Company              Chief Executive Officer

 

                             Senior Executive Vice-President 328,173

 

                               and Chief Executive Officer

 

                             President and COO               322,338

 

                             Executive Vice-President/       313,931

 

                               Chief Information Officer

 

                             Executive Vice-President-       287,455

 

                               External Affairs

Tufts Associated Health      President                       428,887

 

Maintenance Organization     None Given                      357,106

 

                             None Given                      314,211

 

                             None Given                      233,810

Washington Dental Service    Executive Director              296,378

LABOR AND AGRICULTURAL ORGANIZATIONS

Air Line Pilots Association  President                       345,522

American Federation of       President                       260,004

 

State, County and Municipal

 

Employees (AFSCME)           Secretary/Treasurer             222,965

American Federation of       President                       209,045

 

Teachers, AFL-CIO

Directors Guild of America   Executive Director              420,627

International Longshoremens  President                       272,069

 

                             Secretary/Treasurer             245,494

 

                             Executive Vice-President        233,354

International Union of       General President               223,897

 

Operating Engineers

Laborers International       General President               318,827

 

Union of North America       Second Vice-President           232,436

 

                             First Vice-President            225,928

 

                             General Secretary/Treasurer     218,149

 

                             Seventh Vice-President          214,264

Local 32B-32J Service        President                       267,119

 

Employees International Union

Major League Baseball        Executive Director-Legal        931,578

 

Players Association            Counsel

Michigan Education           Executive Director              220,632

 

Association

National Education           President                       221,712

 

Association of US, Inc.

New York City District       Executive Director              216,858

 

Council 37, AFSCME, AFL-CIO  Treasurer                       202,749

Screen Actors Guild, Inc.    National Executive Director     318,007

 

                             Assistant National Executive    277,706

 

                             Director

Service Employees            President                       203,080

 

International Union

United Brotherhood of        General President               219,136

 

Carpenters and Joiners of

 

America

United Food and Commercial   President                       293,992

 

Workers International Union  Secretary/Treasurer             211,337

United Transportation Union  Vice-President                  285,903

 

                             Vice-President                  277,105

 

                             President                       214,927

BUSINESS LEAGUES

AIPSO                        President                       275,713

Air Transport Association    President                       230,603

 

of America

American Bankers Association Executive Vice-President        489,951

American Bar Association     Executive Director              230,525

American Board of Family     Executive Director              381,305

 

Practice

American College of          Executive Director              270,625

 

Emergency Physicians

American Dental Association  Executive Director              215,850

American Gas Association     President                       343,780

 

                             Senior Vice-President           207,667

 

                             Senior Vice-President           203,125

American Hardware            President, Chief Executive      373,588

 

Manufacturing Association      Officer and Secretary

American Health Care         Executive Vice-President        310,059

 

Association

American Hospital            President                       536,200

 

Association                  Senior Vice-President           258,766

 

                             Secretary/Treasurer             244,636

 

                             Executive Vice-President        238,540

 

                             Senior Vice President           213,859

American Institute of        Executive Vice-President/Chief  303,787

 

Architects                     Executive Officer

American Institute of        President                       512,947

 

Certified Public

 

Accountants                  Counsel and Secretary           263,195

American Insurance           President                       616,176

 

Association Inc.             Senior Vice-President           260,065

 

                             Senior Vice-President and       242,569

 

                               General Counsel

 

                             Senior Vice-President           230,782

American Medical             Executive Vice-President        486,910

 

Association                  President-Elect                 329,607

 

                             President                       298,240

 

                             Immediate Past-President        220,070

American Petroleum Institute President                       742,111

 

                             Senior Vice-President           282,393

 

                             Vice-President                  215,108

 

                             Vice-President                  213,440

 

                             Vice-President                  205,387

American Pharmaceutical      Executive Vice-President        336,849

 

Association

American Physical Therapy    Executive Vice-President        259,614

 

Association

American Society of          President                       430,043

 

Association Executives

American Society of          Executive Vice-President        458,773

 

Hospital Pharmacists

American Trucking            President                       295,750

 

Association, Inc.

AMT -- The Association For   President                       346,047

 

Manufacturing Technology

Association of American      President and Chief Executive   488,188

 

Railroads                      Officer

 

                             Vice-President and General      288,065

 

                             Counsel

 

                             Executive Vice-President        274,393

ATP Tour, Inc.               Chief Executive Officer         871,321

Audio Digest Foundation      Vice-President                  207,400

Bank Administration          President/Chief Executive       245,000

 

Institute                      Officer

Breeders' Cup Limited        Executive Director              209,053

 

                             President                       203,077

Cable Television Labs, Inc.  President/Chief Executive       394,038

 

                               Officer

 

                             Vice-President/COO              385,004

California Association of    President                       432,998

 

Hospitals and Health

 

Systems

California Association of    Chief Executive                 250,866

 

Realtors                     Vice-President                  206,145

California Dental            Executive Director              225,443

 

Association

Chamber of Commerce of the   President                       452,704

 

U.S.A.                       Senior Vice-President/Secretary 220,877

 

                             Senior Vice-President           220,877

 

                             Senior Vice-President           220,329

Chemical Industry Institute  President                       278,848

 

of Toxicology

Cosmetic Toiletry and        President                       542,137

 

Fragrance Association

Credit Union National        President                       304,728

 

Association, Inc.

Edison Electric Institute    President                       272,970

 

                             General Counsel and Executive   213,649

 

                               Vice-President

Electronic Industries        President                       475,063

 

Association                  Group Vice-President            201,096

Food Marketing Institute     President                     1,559,305

 

                             Senior Vice-President           254,429

 

                             Senior Vice-President           229,470

Greater Seattle Chamber of   President                       211,909

 

Commerce

Health Insurance Association President                       422,307

 

of America                   Vice-President                  261,542

 

                             Vice-President                  211,379

 

                             Vice-President                  208,553

 

                             Vice-President                  201,846

Illinois Hospital            President                       283,858

 

Association                  Senior Vice-President           219,404

Independent Bankers          Executive Vice-President        218,728

 

Association of America

Institute of Electrical and  Executive Director              255,993

 

Electronics Engineers

International Council Of     Executive Vice-President        539,681

 

Shopping Centers, Inc.

Investment Company Institute President                       619,602

 

                             Executive Vice-President        353,698

 

                             Senior Vice-President --        299,539

 

                               Legislative Affairs

 

                             Vice-President -- Tax and

 

                               Pension                       230,361

Motion Picture Association   President and Chief Executive   816,368

 

of America                     Officer

 

                             Executive Vice-President and    606,115

 

                               COO

NASDAQ, Inc.                 President                       214,378

National Academy of          President                       612,386

 

Recording Arts and Sciences,

 

Inc.

National Association of      President                       634,426

 

Chain Drug Stores            Vice-President -- Pharmacy      269,408

National Association of      President                       212,884

 

Convenience Stores

National Association of      None Given                      280,360

 

Professional Insurance

 

Agents

National Association of      Executive Vice-President        438,340

 

Realtors

National Association of      President and Chief Executive   431,178

 

Securities Dealers, Inc.       Officer

 

                             Vice-President                  202,072

National Council on          President                       445,580

 

Compensation Insurance       COO                             317,772

 

                             Senior Vice-President -- Rates  227,256

 

                               and External Affairs

 

                             Senior Vice-President --         200,328

 

                               Information Resource

National Electrical          President                       214,143

 

Manufacturers Association

National Hot Rod             President                       335,000

 

Association

National Institute for       President                       227,925

 

Automotive Service

 

Excellence

National Rural Electric      Executive Vice-President        233,777

 

Cooperative

National Soft Drink          President                       503,798

 

Association

National Solid Wastes        Executive Director/Chief        321,090

 

Management Association         Executive Officer

National Telephone           Executive Director              232,300

 

Cooperative Association

National Wholesale           Past Executive Director         589,149

 

Druggists' Association

New York Shipping            President                       230,550

 

Association, Inc.

Newspaper Association of     President and Chief Executive   815,719

 

America                        Officer

 

                             Executive Vice-President and    309,361

 

                               COO

Open Software Foundation     President                     1,461,569

 

                             Treasurer                       914,216

 

                             Secretary                       267,299

PGA Tour, Inc.               Commissioner                  4,103,493

 

                             Deputy Commissioner/COO         693,335

                             Executive Vice-President-       528,580

 

                               Marketing

 

                             Executive Vice-President-       383,644

 

                             Counsel

 

                             Executive Vice-President        344,866

Portland Cement Association  President                       301,324

Public Securities            President and Secretary         320,424

 

Association                  Executive Vice-President        266,613

 

                             Senior Vice-President and       208,607

 

                               General Counsel

Savings and Community        Former President                310,508

 

Bankers of America

Savings Banks Life           President (Retired)             213,463

 

Insurance Fund

Semiconductor Equipment and  President                       294,812

 

Materials International

Semiconductor Research       President                       272,981

 

Corporation

Sheet Metal and Air          Executive Vice-President        232,310

 

Conditioning Contractors'

 

National Association

Society for Human Resource   President/Chief Executive       334,080

 

Management                     Officer

Texas Medical Association    Executive Vice-President        225,277

The Association of Trial     Executive Director              243,408

 

Lawyers of America

The Council for Tobacco      Chairman/President              340,634

 

Research -- USA, Inc.

The Hospital Association of  President                       239,241

 

Pennsylvania                 Senior Vice-President           207,759

The National Association of  Executive Vice-President        586,026

 

Life Underwriters            Senior Vice-President-General   208,145

 

                               Counsel

The Professional Golfers'    Chief Executive Officer         386,788

 

Association of America

The Society of the Plastics  President                       290,637

 

Industry, Inc.

 

____________________________________________________________________

 

Source: GAO analysis of IRS data.

                             APPENDIX II

                  EXECUTIVES OF SELECTED TAX-EXEMPT

 

               ORGANIZATIONS WHO RECEIVED COMPENSATION

 

                 FROM RELATED ORGANIZATIONS IN 1992

Organization (related

 

organization)                      Title                  Compensation

 

______________________________________________________________________

 

SOCIAL WELFARE ORGANIZATIONS

Higher Education Loan         Chairman of the Board and

 

Program (HELP) of Kansas        Director                      $49,700

HELP Management

 

Corporation                                                   149,100

HELP America Inc.                                              12,400

HELP D.C. Inc.                                                 24,800

HELP W.V. Inc.                                                 12,400

TOTAL                                                        $248,400

 

_____________________________________________________________________

Higher Education Loan        President/Secretary/

 

Program (HELP) of Kansas       Treasurer                       31,600

HELP Management

 

Corporation                                                    52,800

HELP Management

 

Corporation                                                    15,500

HELP W.V. Inc.                                                  5,400

TOTAL                                                        $105,300

 

_____________________________________________________________________

AVMED, Inc.                  President/Director               235,459

Santafe

 

Management

 

Services, Inc.                                                 16,011

Alachua General

 

Hospital, Inc.                                                 35,676

TOTAL                                                        $287,146

 

_____________________________________________________________________

AVMED, Inc.                  Executive Vice

 

                             President/Director               147,812

Wellness, Inc.                                                  3,650

Santafe Medical

 

Services, Inc.                                                  3,650

Alachua General

 

Hospital, Inc.                                                 12,744

Bradford Hospital,

 

Inc.                                                            3,650

Suwannee Hospital,

 

Inc.                                                            1,825

Lake Shore

 

Hospital, Inc.                                                  5,475

North Central Florida

 

Rehabilitation, Inc.                                            3,650

Santafe

 

Management

 

Services, Inc.                                                  1,113

TOTAL                                                        $183,599

 

_____________________________________________________________________

Henry Ford Health Care       President

 

Corporation Self-Funded

 

Liability Plan                                                     $0

Henry Ford Health

 

System                                                        700,900

TOTAL                                                        $700,900

 

_____________________________________________________________________

Henry Ford Health Care       Trustee

 

Corporation

 

Self-Funded Liability Plan                                          0

Henry Ford Health

 

System                                                        488,108

TOTAL                                                        $488,108

 

_____________________________________________________________________

Henry Ford Health Care       Treasurer

 

Corporation Self-Funded

 

Liability Plan                                                      0

Henry Ford Health

 

System                                                        395,601

TOTAL                                                        $395,601

 

_____________________________________________________________________

Henry Ford Health Care       Trustee

 

Corporation Self-Funded

 

Liability Plan                                                      0

Henry Ford Health

 

System                                                        263,210

TOTAL                                                        $263,210

 

_____________________________________________________________________

Henry Ford Health Care       Trustee

 

Corporation Self-Funded

 

Liability Plan                                                      0

Henry Ford Health

 

System                                                        212,525

TOTAL                                                        $212,525

 

_____________________________________________________________________

LABOR AND AGRICULTURAL ORGANIZATIONS

International Brotherhood    General Secretary-Treasurer

 

of Teamsters                                                  187,617

Teamsters Local

 

Union No. 30                                                   12,320

TOTAL                                                        $199,937

 

_____________________________________________________________________

International Brotherhood    Vice President-International

 

of Teamsters                 Representative                   166,564

Teamsters Local

 

Union No. 1999                                                 57,684

Canadian

 

Conference of

 

Teamsters                                                      78,289

TOTAL                                                        $302,537

 

_____________________________________________________________________

International Brotherhood    Vice President-International

 

 of Teamsters                Representative                    84,523

Teamsters Local

 

Union No. 938                                                  85,566

Canadian

 

Conference of

 

Teamsters                                                      19,100

TOTAL                                                        $189,189

 

_____________________________________________________________________

District 37 Benefits Fund    Chairman of the Board

 

Trust                                                              $0

AFSCME District

 

Council 37                                                    224,301

TOTAL                                                        $224,301

 

_____________________________________________________________________

District 37 Benefits Fund    Trustee

 

Trust                                                               0

AFSCME District

 

Council 37                                                    210,016

TOTAL                                                        $210,016

 

_____________________________________________________________________

District 37 Benefits Fund    Trustee

 

Trust                                                               0

AFSCME District

 

Council 37                                                    184,408

TOTAL                                                        $184,408

 

_____________________________________________________________________

Seafarers Harry Lundberg     Trustee

 

School of Seamanship                                                0

Seafarers

 

International Union

 

of North America                                               68,977

United Industrial

 

Workers, Services,

 

Transportation,

 

Professional, and

 

Government of

 

North America                                                  40,000

Seafarers Building                                             24,923

 

Corporation

TOTAL                                                        $133,900

 

_____________________________________________________________________

Joint Employment             Administrator                      5,323

 

Committee

MEBA Medical and

 

Benefits Plan                                                 140,540

TOTAL                                                        $145,863

 

_____________________________________________________________________

BUSINESS LEAGUES

National Association of      President and Chief

 

Securities Dealers, Inc.     Executive Officer                431,178

NASD Market

 

Services, Inc.                                                214,378

NASDAQ, Inc.                                                  214,378

TOTAL                                                        $859,934

 

_____________________________________________________________________

National Association of      Executive Vice President

 

Securities Dealers, Inc.                                      181,133

NASD Market

 

Services, Inc.                                                 90,566

NASDAQ, Inc.                                                   90,566

TOTAL                                                        $362,265

 

_____________________________________________________________________

PGA Tour, Inc.               Commissioner                  $4,103,493

PGA Tour Golf

 

Course Properties,

 

Inc.                                                          711,807

TOTAL                                                      $4,815,300

 

_____________________________________________________________________

PGA Tour, Inc.               Deputy Commissioner/COO          693,335

PGA Tour Golf

 

Course Properties,

 

Inc.                                                          676,512

TOTAL                                                      $1,369,847

 

_____________________________________________________________________

PGA Tour, Inc.               Executive Vice

 

                             President/Counsel                383,644

 

PGA Tour Golf

 

Course Properties,

 

Inc.                                                          159,420

TOTAL                                                        $543,064

 

_____________________________________________________________________

 

The Hospital Association of  President

 

Pennsylvania                                                  239,241

PHICO Group, Inc.                                              83,750

TOTAL                                                        $322,991

 

_____________________________________________________________________

NASDAQ, Inc.                 President                        214,378

NASD Market

 

Services, Inc.                                                214,378

National

 

Association of

 

Securities Dealers,

 

Inc.                                                          428,760

TOTAL                                                        $857,516

 

_____________________________________________________________________

NASDAQ, Inc.                 Senior Vice President             92,367

NASD Market

 

Services, Inc.                                                 75,401

National

 

Association of

 

Securities Dealers,

 

Inc.                                                           20,734

TOTAL                                                        $188,502

 

_____________________________________________________________________

NASDAQ, Inc.                 Executive Vice President          90,566

NASD Market

 

Services, Inc.                                                 90,566

National

 

Association of

 

Securities Dealers,

 

Inc.                                                          181,133

TOTAL                                                        $362,265

 

_____________________________________________________________________

NASDAQ, Inc.                 Executive Vice President          84,710

NASD Market

 

Services, Inc.                                                 84,710

National

 

Association of

 

Securities Dealers,

 

Inc.                                                          169,422

TOTAL                                                        $388,842

 

_____________________________________________________________________

New Jersey Hospital          President

 

Association                                                   142,871

Center for Health

 

Affairs Inc.                                                  214,089

TOTAL                                                        $356,960

 

_____________________________________________________________________

New Jersey Hospital          Treasurer

 

Association                                                         0

Center for Health

 

Affairs Inc.                                                  180,457

TOTAL                                                        $180,457

New Jersey Hospital          Secretary

 

Association                                                         0

Center for Health

 

Affairs Inc.                                                  169,309

TOTAL                                                        $169,309

 

_____________________________________________________________________

National Automobile          Executive Vice President

 

Dealers Association                                           163,586

NADA Services

 

Corporation                                                   104,264

TOTAL                                                        $267,850

 

_____________________________________________________________________

National Automobile          Assistant Secretary

 

Dealers Association                                            72,011

NADA Services

 

Corporation                                                    58,918

TOTAL                                                        $130,929

 

_____________________________________________________________________

American Trucking            President

 

Association, Inc.                                             295,750

ATA Litigation Center                                          45,500

ATA Foundation                                                 45,500

Deliver USA                                                    22,750

ATA Services, Inc.                                             22,750

Trucking

 

Information Services                                           22,750

TOTAL                                                        $455,000

 

_____________________________________________________________________

California League of         President

 

Savings Institutions                                           79,823

California League

 

Financial Services,

 

Inc.                                                           25,207

TOTAL                                                        $105,030

 

_____________________________________________________________________

National Wholesale           President

 

Druggists' Association                                        157,611

NWDA Service

 

Corp.                                                          22,370

TOTAL                                                        $179,981

American Insurance           President

 

Association, Inc.                                             616,176

American Insurance

 

Services Group, Inc.                                          331,788

TOTAL                                                        $947,964

 

_____________________________________________________________________

American Insurance           Senior Vice-President and

 

Association, Inc.            COO                             $186,154

American Insurance

 

Services Group, Inc.                                          124,104

TOTAL                                                        $310,258

 

_____________________________________________________________________

     Note: This table includes only the top five executives of these

 

organizations who received compensation from related organizations.

Source: GAO analysis of IRS data.

                            APPENDIX III

                ASSETS, REVENUES AND EXPENSES OF THE

 

           TAX-EXEMPT ORGANIZATIONS INCLUDED IN THIS STUDY

Dollars in thousands

Name of organization                       Assets  Revenues  Expenses

 

______________________________________________________________________

SOCIAL WELFARE ORGANIZATIONS

American Association of Retired Persons   $330,638  $292,264 $310,763

 

AVMED, Inc.                                 98,346   310,256  288,561

 

Bank of Sweden Tercentenary Foundation     284,429    20,988   14,371

 

Blue Care Network of Southeast Michigan    132,446   173,845  158,686

 

Blue Care Network-Great Lakes               54,598   172,034  169,729

 

Blue Cross Blue Shield Association         134,320   133,381  131,159

 

California Vision Service                  143,754   304,224  299,865

 

Capital District Physicians' Health Plan,   69,372   164,166  151,289

 

   Inc.

 

City of Mesa-Municipal Development          50,152     3,101    2,339

 

   Corporation

 

City of Scottsdale Municipal Property      203,588    41,913   15,178

 

   Corporation

 

Columbus Multi-School Building              57,291     1,653    3,316

 

   Corporation

 

Connecticare                                60,906   190,645  187,197

 

County of Riverside Asset Leasing          580,280    34,651   29,879

 

   Corporation

CSDA Finance Corporation                   274,390    19,787   19,730

 

Delta Dental Plan of Michigan, Inc.        148,660   401,729  399,206

 

Delta Dental Plan of New Jersey, Inc.       67,113   130,564  122,605

 

Disabled American Veterans                 144,832    70,995   68,854

 

Firemen's Association of the State of New   66,710     9,549    5,610

 

   York

 

Firemens Relief Associations of Minnesota   52,968     3,403    1,419

 

Group Health Association                    82,704   251,817  248,624

Henry Ford Health Care Corporation          55,565    23,345   21,712

 

   Liability Fund

Higher Education Assistance Foundation     216,210   172,588   62,703

 

Higher Education Loan Program of           235,523    14,972   10,969

 

   Kansas, Inc.

Independent Health Association, Inc.        83,935   252,288  244,398

 

International Olympic Committee            127,121    18,122   22,696

 

JADER Trust                                101,133     6,194    4,060

 

Luso-American Development Foundation       130,327    24,890   15,188

 

Marine Spill Response Corporation          264,818    84,610   72,888

 

Medcenters Health Care, Inc.               102,899   352,189  349,834

 

Merrillville Multi-School Building         117,269     3,304    5,773

 

   Corporation

 

Midwest Foundation Independent             110,063   225,844  213,056

 

   Physicians Association

 

Minneapolis Fire Department Relief         165,395    15,777   11,714

 

   Association

 

Minneapolis Police Relief Association      264,282    41,230      967

 

Minnesota School Boards Association         67,554    42,090   42,056

 

   Insurance Trust

 

Mohawk Valley Physician's Health Plan       66,183   178,909  175,637

 

Municipal Improvement Corporation/Los       69,061   151,037  158,579

 

   Angeles

 

Mutual of America Life Insurance Company 5,521,940   746,637  718,746

 

National Rifle Association of America      111,019   101,781  139,022

 

New Albany-Floyd County School Building     57,932     1,242       51

 

   Corporation

 

Physicians Health Plan, Inc.                56,639   178,754  178,352

 

Regional Airports Improvement              489,656    38,936   38,936

 

   Corporation

 

Sisters of Providence Good Health Plan of   58,863   117,663  111,068

 

   Oregon

 

The Buffalo Enterprise Development          78,897     2,192    2,926

 

   Corporation

 

Trans-Alaska Pipeline Liability Fund       327,579    37,746   57,633

 

Tufts Associated Health Maintenance         88,902   311,821  300,897

 

   Organization

 

Washington Dental Service                   73,670   191,874  188,824

LABOR AND AGRICULTURAL ORGANIZATIONS

AFL-CIO                                     77,991    69,037   61,736

 

Air Line Pilots Association                 97,057    82,143   69,723

 

Amalgamated Clothing and Textile            25,273     3,589    2,053

 

   Workers Union-Rochester Joint Board

 

American Federation  of State, County and   26,862    77,326   74,497

 

   Municipal Employees

 

American Federation of Teachers, AFL-CIO    51,073    69,280   63,279

 

Atlantic Coast District ILA                 26,130     3,275    2,726

 

Bakery Confectionery and Tobacco            24,178    11,875   12,056

 

   Workers International

 

Carrier-ILA Container Freight Station       33,375    14,544    2,330

 

   Trust Fund

 

Dakota's Areawide IBEW-NECA Pension         35,770     3,447    1,295

 

   Fund

 

Directors Guild of America                  45,632    10,553    7,029

 

District Council 37 Benefits Fund Trust    147,285   155,707  138,853

 

Educational and Cultural Trust Fund of      30,534     1,766    6,926

 

   the Electrical Industry

 

Holstein-Friesian Association of America    27,845    16,166   16,866

 

International Brotherhood of Electrical     23,421     5,612    4,342

 

  Workers #5

 

International Brotherhood of Painters and   36,924    24,445   23,483

 

  Allied Trades

 

International Brotherhood of Teamsters     138,104    98,321  129,850

 

International Ladies Garment Workers        61,032    43,539   45,896

 

International Ladies Garment Workers       383,316    83,969   66,865

 

  Union

 

International Longshoremens                 39,479    10,635   10,684

 

International Union of Electronic           51,441    21,792   19,982

 

  Workers, AFL-CIO

 

International Union of Operating

 

  Engineers                                 85,802    36,854   23,522

 

International Union, UAW                 1,052,775   386,988  365,476

 

Joint Employment Committee                  23,606     1,923    1,009

 

Laborers International Union of North      151,957    52,223   82,546

 

  America

 

Local 32B-32J Service Employees             64,207    24,406   17,201

 

  International Union

 

Local One, Amalgamated Lithographers of     30,112     3,806   17,748

 

  America

 

Los Angeles County Fair Association         88,041    30,297   29,446

 

Major League Baseball Players

 

  Association                              128,461    38,974    5,927

 

Michigan Education Association              23,529    41,881   43,198

 

National Education Association of

 

  US, Inc.                                 127,661   186,472  186,754

 

National League of Postmasters              26,533    33,892   91,700

 

New York City District Council 37,          31,216    26,166   24,654

 

  AFSCME, AFL-CIO

 

North Carolina Farm Bureau Federation,      22,491     6,425    4,321

 

  Inc.

 

Retail Wholesale and Department Store       40,690     6,779    2,380

 

  Union, Local 338

 

Retail Wholesale And Department Store       24,108     8,165    9,497

 

  Union

 

Screen Actors Guild, Inc.                   40,832    25,747   28,798

 

Seafarers Harry Lundeberg School of         40,183     9,371   15,426

 

  Seamanship

 

Service Employees International Union       45,325    57,935   55,026

 

UAW-Chrysler Skill Development And          55,368    50,248   28,835

 

  Training Program

 

United Brotherhood of Carpenters and       154,532    58,204   56,542

 

  Joiners of America

 

United Food And Commercial Workers         127,861   117,159  108,752

 

  International Union

 

United Mine Workers of America             127,765    37,887   26,077

 

United Paperworkers International Union     33,025    28,114   26,415

 

United States Letter Carriers Mutual        67,931    20,145   17,557

 

  Benefit Association

 

United Steelworkers of America             194,904   232,187  237,493

 

  International Union

 

United Transportation Union                 48,407    40,937   37,326

BUSINESS LEAGUES

Academy of Motion Picture Arts and          38,730    17,431   11,909

 

  Sciences

 

AIPSO                                       19,552    11,339   34,291

 

Air Transport Association of America        13,234    35,871   35,871

 

Alabama Insurance Guaranty Association      23,383    11,357   11,164

 

American Association of Nurse               10,786     8,906    7,496

 

  Anesthetists

 

American Association of Oral And            12,979     7,373    6,881

 

  Maxillofacial Surgeons

 

American Bankers Association                82,702    53,318   50,732

 

American Bar Association                   117,925    95,142   88,439

 

American Board of Family Practice           11,713     5,993    5,334

 

American Board of Obstetrics and             9,600     3,508    3,046

 

  Gynecology, Inc.

 

American Board of Psychiatry and            10,187     5,708    4,055

 

  Neurology

 

American College of Emergency               10,135    13,580   13,506

 

  Physicians

 

American Dental Association                 52,635    43,240   46,023

 

American Gas Association                    24,817    59,383   59,148

 

American Hardware Manufacturing             17,846     7,771    6,451

 

  Association

 

American Health Care Association            10,707    10,709   10,373

 

American Health Information Management      17,447     8,243    9,304

 

  Association

 

American Hospital Association               83,379    85,474   85,088

 

American Institute of Architects            44,446    31,396   34,988

 

American Institute of Certified Public      71,502   120,200  117,745

 

  Accountants

 

American Insurance Association Inc.         10,785    22,607   23,595

 

American Medical Association               215,144   170,186  174,571

 

American Nurses Association                 11,798    21,375   19,132

 

American Petroleum Institute                40,790    69,510   70,728

 

American Pharmaceutical Association          9,291     9,956    9,954

 

American Physical Therapy Association       16,447    17,017   16,484

 

American Plywood Association                 9,315    13,757   13,464

 

American Public Transit Association         14,225     9,325    9,142

 

American Society of Association             12,013    15,752   15,595

 

  Executives

 

American Society of Hospital Pharmacists    29,375    24,837   23,021

 

American Speech-Language-Hearing            26,872    16,330   16,088

 

  Association

 

American  Trucking Association, Inc.        21,192    27,482   27,018

 

American Veterinary Medical Association     15,263    13,122   12,885

 

Americus-Sumpter Payroll Development         9,644     1,993      771

 

  Authority

 

AMT -- The Association for Manufacturing    19,372    17,879   17,065

 

  Technology

 

Arkansas Capital Corporation                16,976     1,303    1,079

 

Association for Information And Image       14,571     9,992    7,873

 

  Management

 

Association of American Railroads           41,007    93,240   83,106

 

ATP Tour, Inc.                              24,922    42,759   42,350

 

Attorney Registration and Disciplinary      13,495     7,216    5,842

 

  Commission of the Supreme Court of

 

  Illinois

 

Audio Digest Foundation                     17,997     8,201    7,753

 

Bank Administration Institute               14,620     4,358    4,385

 

Baseball Office of the Commissioner         18,651    15,636   14,636

 

Breeders' Cup Limited                       31,510    30,041   24,973

 

Cable Television Labs, Inc.                 19,305    11,176   10,046

 

California Association of Hospitals and     16,939    12,353   12,572

 

  Health Systems

 

California Association of Realtors          12,541    15,961   15,808

 

California Dental Association               70,445    16,881   10,617

 

California League of Savings Institutions   12,974     2,650    2,776

 

California Medical Association, Inc.        10,319    16,154   16,891

 

Career College Association                   6,812    10,337   10,792

 

Central Minnesota Development Company       13,290     1,110    1,087

 

Chamber of Commerce of the USA              40,916    67,474   80,186

 

Chemical Industry Institute of Toxicology   20,924    15,454   15,489

 

Chemical Specialties Manufacturers           9,383     3,811    3,519

 

  Association

 

Chicago Bar Association                     16,590     7,526    7,246

 

Connecticut Insurance Guaranty              55,187    10,636   23,394

 

  Association

 

Construction Industry Manufacturing         15,519     8,513    3,425

 

  Association

 

Cosmetic Toiletry And Fragrance             12,611     8,498    8,396

 

  Association

 

Credit Union National Association, Inc.     12,837    24,028   22,875

 

Delaware Insurance Guaranty Association     13,921     8,348    3,063

 

Edison Electric Institute                   46,546    61,299   59,154

 

Electronic Industries Association           47,914    41,440   34,668

 

Empire State Electric Energy                32,443     2,500    2,625

 

Florida Insurance Guaranty Association,     45,203   147,783  221,720

 

  Inc.

 

Florida Self Insurers Guaranty

 

  Association, Inc.                        Unknown     6,552    7,397

 

Food Marketing Institute                    34,241    34,347   33,354

 

Georgia Insurers Insolvency Pool            18,308     1,511    5,743

 

Greater Erie Industrial Development         14,271     1,079      365

 

  Corporation

 

Greater Seattle Chamber of Commerce         10,117     7,746    7,764

 

Health Insurance Association of America     17,963    27,355   32,675

 

Illinois Hospital Association               16,859    10,769   10,077

 

Illinois Insurance Exchange Guaranty        18,459     1,686        2

 

  Fund, Inc.

 

Illinois Insurance Guaranty Fund            47,792    23,896   18,887

 

Independent Bankers Association of          11,376     8,652    8,024

 

  America

 

Independent Insurance Agents of America     14,324    11,105    9,289

 

Indiana Life and  Health Insurance          43,640    33,291   36,670

 

  Guaranty Association

 

Institute of Electrical And Electronics    109,639   110,474  107,237

 

  Engineers

 

International Council of Shopping           17,639    18,789   17,285

 

  Centers, Inc.

 

Investment Company Institute                14,518    23,255   22,372

 

Louisiana  Insurance Guaranty Association   28,805    70,760   75,814

 

Maine Insurance Guaranty Association        15,126    14,039   14,650

 

Marine Preservation Association             25,660   104,117   85,902

 

Massachusetts Insurers Insolvency Fund      56,289    33,155   23,782

 

Massachusetts Medical Society               60,218    55,584   53,005

 

Medical and Chirurgical Faculty of          15,198     4,387    3,791

 

  Maryland

 

Medical Society of the State of New York    11,369     8,102    8,533

 

Michigan Automobile Insurance              312,544   242,643  239,053

 

  Placement Facility

 

Michigan Basic Property Insurance           52,602    94,813   76,990

 

  Association

 

Michigan Credit Union League                17,564     5,557    5,180

 

Michigan Life And Health Insurance           9,289     9,474    7,728

 

  Guaranty Association

 

Michigan Property And Casualty Guaranty     30,056     9,560   15,067

 

  Association

 

Million Dollar Round Table of the National  13,528     8,473    7,755

 

  Association of Life Underwriters

 

Minnesota Insurance Guaranty Association    40,073    24,099   25,490

 

Minnesota Life and Health Insurance         25,524     5,053   14,094

 

  Guaranty Association

 

Minnesota Workers Compensation              46,595     7,138    3,337

 

  Insurers Association, Inc.

 

Mississippi Insurance Guaranty              15,020     5,172    3,945

 

  Association

 

Mississippi Life And Health Insurance       13,736     3,349    3,341

 

  Guaranty Association

 

Missouri Joint Underwriting Association     11,197     7,779    8,808

 

Motion Picture Association of America       20,393    29,322   27,860

 

Motor Vehicle Accident Indemnification      54,770    34,706   33,023

 

  Corporation

 

NASDAQ, Inc.                                79,045    62,313   46,554

 

National Academy of Recording Arts and      19,745    15,769   11,734

 

  Sciences, Inc.

 

National Association of Chain Drug Stores   12,636    14,460   13,549

 

National Association of Convenience          9,596     7,818    6,961

 

  Stores

 

National Association of Music Merchants,    15,057     5,889    4,733

 

  Inc.

 

National Association of Printers And        17,254     3,305    3,253

 

  Lithographers

 

National Association of Professional        24,617     5,512    5,397

 

  Insurance Agents

 

National Association of Realtors            51,529    48,611   57,469

 

National Association of Securities         286,251   161,972  144,034

 

  Dealers, Inc.

 

National Automobile Dealers Association     42,173    23,468   18,774

 

National Cargo Bureau                        9,874     8,971    7,989

 

National Council on Compensation            48,693   100,215   98,890

 

  Insurance

 

National Electrical Manufacturers            9,282    11,760   11,495

 

  Association

 

National Federation of Independent          30,553    63,160   61,917

 

  Business, Inc.

 

National Food Processors Association        29,228    17,481   16,557

 

National Hot Rod Association                23,375    44,120   41,377

 

National Institute for Automotive Service   11,500    10,933    8,300

 

  Excellence

 

National Live Stock and Meat Board          13,623    53,977   52,773

 

National Rural Electric Cooperative         39,192    54,625   53,857

 

National Soft Drink Association             12,230    10,298    7,033

 

National Solid Wastes Management            11,110    14,938   14,001

 

  Association

 

National Telephone Cooperative              14,940     7,600    7,075

 

  Association

 

National Wholesale Druggists' Association   11,212     7,372    6,870

 

New Hampshire Automobile Reinsurance        79,042    32,113    1,924

 

  Facility

 

New Hampshire Insurance Guaranty            14,087     8,292    4,796

 

  Association

 

New Jersey Hospital Association             43,160     7,329    6,889

 

New Jersey Property Liability Insurance     34,462   174,652    8,618

 

  Guaranty Association

 

New Jersey Surplus Lines Insurance          34,816    26,043    1,579

 

  Guaranty Fund

 

New Mexico Property and Casualty             9,548    10,343    6,902

 

  Insurance Guaranty Association

 

New York Shipping Association, Inc.         51,823   181,265   83,085

 

New York State Bar Association              11,784    13,167   12,287

 

Newspaper Association of America            26,263    32,225   32,786

 

North Carolina Insurance Guaranty           17,056     9,042   10,145

 

  Association

 

North Carolina Life and Health Guaranty     33,999    48,129   23,419

 

  Association

 

North Dakota Insurance Guaranty              1,724       137      212

 

  Association

 

Northern California Golf Association        11,087     3,478    2,992

 

Ohio Education Association                  11,429    28,297   28,291

 

Ohio Insurance Guarantee Association        57,319    13,211   10,398

 

Ohio Life And Health Insurance Guaranty     92,509    43,250    8,993

 

  Association

 

Ohio State Bar Association                  11,762     5,734    5,065

 

Oklahoma Property and Casualty              20,665    10,627    5,615

 

  Insurance Guaranty Association

 

Open Software Foundation                    27,876    61,860   61,860

 

Packaging Machinery Manufacturers           11,710     9,051    8,100

 

  Institute

 

Pennsylvania Chamber of Business and         9,639     3,508    3,087

 

  Industry

 

Pennsylvania Insurance Guaranty            128,763    11,282   14,103

 

  Association

 

Pennsylvania Life and Health Insurance      45,503    69,883   71,326

 

  Guaranty Association

 

Pennsylvania Medical Society                23,816     8,634    8,453

 

Pennsylvania Professional Liability Joint   58,275     8,852    3,727

 

  Underwriters

 

Pennsylvania State Education Association    22,988    30,829   31,033

 

PGA Tour, Inc.                             199,157   174,111  171,341

 

Portland Cement Association                 13,745    10,486   13,439

 

Printing Industries of America, Inc.         9,711     8,954    9,576

 

Public Securities Association               11,124    13,310   12,297

 

Realtors National Marketing Institute        9,958     7,043    7,546

 

  of the National Association of Realtors

 

Regional IDC of Southwestern               111,673    18,241   19,231

 

  Pennsylvania

 

Retail Merchants Association of Greater     26,024     2,233    2,287

 

  Richmond

 

Rhode Island Automobile Insurance Plan      15,638     3,768    3,372

 

Rhode Island Insurers Insolvency Fund       14,785    19,882   14,680

 

Savings And Community Bankers of            28,290    22,394   24,377

 

  America

 

Savings Banks Life Insurance Fund           17,592    10,858   10,367

 

Securities Investor Protection

 

  Corporation                              734,867    73,450   16,850

 

Self Insurers Security Fund                 21,465     6,589    5,078

 

Semiconductor Equipment and Materials       15,222    17,349   16,457

 

  International

 

Semiconductor Research Corporation          10,491    35,028   35,620

 

Sheet Metal and Air Conditioning             9,492     5,437    6,048

 

  Contractors' National Association

 

Snake River Power, Inc.                     14,485     1,333    1,330

 

Society for Human Resource Management       14,404    15,433   14,848

 

South Carolina Property and Casualty         9,705     4,001    3,264

 

  Insurance Guaranty Association

 

State Medical Society of Wisconsin          10,288     4,633    4,542

 

Tennessee Insurance Guaranty                13,354     1,845    1,620

 

  Association

 

Texas Life Accident Health and Hospital     63,062    75,747   27,989

 

  Service Insurance Guaranty Association

 

Texas Medical Association                   28,721    12,601   12,286

 

Texas Property And Casualty Insurance       91,068   120,515   97,641

 

  Guaranty Association

 

Textile Hall Corporation                    21,350     4,539    2,042

 

The American Society of Anesthesiologists   21,889    13,922   11,318

 

The Association of Trial Lawyers of         13,235    15,144   16,531

 

  America

 

The Council for Tobacco Research-USA,       15,111    25,666   25,491

 

  Inc.

 

The Economic Development Partnership        28,497    14,829    3,599

 

  of Alabama

 

The Hospital Association of Pennsylvania   194,846     7,200    7,695

 

The Medical Society of the District of       9,990     2,153    2,033

 

  Columbia

 

The National Association of Life            13,135    18,466   22,341

 

  Underwriters

The Professional Golfers' Association of    44,090    32,647   29,902

 

  America

 

The Society of the Plastics Industry, Inc.  28,419    77,212   76,310

 

Uniform Code Council, Inc.                  49,007    10,372    4,636

 

United States Tennis Association, Inc.      74,862    82,235   90,747

 

University Research Park, Inc.              14,953     1,815    1,281

 

Virginia Property And Casualty Insurance    13,579     2,109    6,997

 

  Guaranty Association

                            APPENDIX III

 

                ASSETS, REVENUES AND EXPENSES OF THE

 

           TAX-EXEMPT ORGANIZATIONS INCLUDED IN THIS STUDY

Dollars in thousands

Name of Organization                 Assets  Revenues  Expenses

 

____________________                 ______  ________  ________

WACO Industrial Foundation           12,149       209       275

 

Wisconsin Insurance Security Fund    13,870    14,602    11,062

 

Wisconsin Workers Compensation      224,116   125,086   103,487

 

  Insurance Pool

 

York County Industrial Development  226,400       483       446

 

  Authority

 

York County Industrial Development   15,728     1,045       996

 

  Corporation

Source: GAO analysis of IRS data.

                             APPENDIX IV

 

                   CATEGORY AND TYPE OF TAX-EXEMPT

 

               ORGANIZATIONS UNDER IRC SECTION 501(c)

SECTION 501(c)      TYPES OF TAX-EXEMPT ORGANIZATIONS

 

CATEGORY

  (1)             Corporations organized under an act of Congress and

 

                  operated as an instrumentality of the United

 

                  States, for example, Federal Deposit Insurance

 

                  Corporation.

  (2)             Title holding corporations organized to hold

 

                  title to property of a tax-exempt organization,

 

                  collect the income, and deliver the net proceeds to

 

                  the exempt organization.

  (3)             Entities organized and operated exclusively for

 

                  religious and charitable, scientific, testing for

 

                  public safety, literacy, or educational purposes,

 

                  or for the prevention of cruelty to children or

 

                  animals, or to foster amateur sports.

  (4)             Civic leagues or organizations operated exclusively

 

                  for the promotion of social welfare or local

 

                  associations of employees (earnings devoted to

 

                  charitable, educational, or recreational purposes).

  (5)             Labor, agricultural, and horticultural

 

                  organizations organized to provide education and

 

                  instruction on improving working conditions and

 

                  products.

  (6)             Business leagues, chambers of commerce, real estate

 

                  boards, and professional football leagues organized

 

                  to improve business conditions.

  (7)             Clubs organized for pleasure and recreational

 

                  purposes.

  (8)             Fraternal beneficiary societies and associations

 

                  organized to provide for the payment of life,

 

                  sickness, accident or other benefits to members and

 

                  operated under a framework of self-governing

 

                  branches chartered by a parent organization.

  (9)             Voluntary employee beneficiary association

 

                  providing for payment of life, sickness, accident

 

                  or other benefits to members of the association.

  (10)            Domestic fraternal societies and associations

 

                  operated exclusively for social, educational,

 

                  religious, scientific, charitable, and fraternal

 

                  purposes under a framework of self-governing

 

                  branches chartered by a parent organization.

  (11)            Teachers' retirement fund associations organized on

 

                  a local basis.

  (12)            Benevolent life insurance associations; mutual

 

                  companies, such as electric, irrigation, and

 

                  cooperative companies organized on a local basis.

  (13)            Cemetery companies owned and operated for the

 

                  benefit of their members and not operated for

 

                  profit.

  (14)            Nonprofit credit unions and mutual reserve funds

 

                  providing loans to members and reserve funds

 

                  for domestic building and loan associations,

 

                  cooperative banks and mutual savings banks,

 

                  (mutuals must have been organized before 9/1/57).

  (15)            Mutual insurance companies or associations, with

 

                  net premiums not more than $350,000 providing

 

                  insurance to members (other than life companies).

  (16)            Cooperative organizations established to finance

 

                  crop operations.

  (17)            A trust or trusts providing for the payment of

 

                  supplemental unemployment benefits.

  (18)            A trust providing for the payment of benefits under

 

                  a pension plan funded by employees, created prior

 

                  to 6/25/59.

  (19)            A post or organization promoting the welfare of

 

                  past or present members of the Armed Forces.

  (20)            An organization or trust providing legal services

 

                  as part of a qualified group legal services plan.

  (21)            A trust or trusts organized to meet black lung

 

                  disability and liability claims.

  (22)            Pension plan withdrawal liability trust created to

 

                  provide funds to meet payments under section

 

                  4223(c) or (h) of the Employee Retirement Income

 

                  Security Act of 1974.

  (23)            Veterans' insurance associations created to provide

 

                  insurance and other benefits to member veterans.

  (24)            Trusts described in section 4049 of the Employee

 

                  Retirement Income Security Act of 1974.

  (25)            Title-holding companies with 35 or fewer entities

 

                  exempt under IRC section 401 and 501(c)(3) and

 

                  governmental units.

Source: IRC.

APPENDIX V

 

MAJOR CONTRIBUTORS TO THIS BRIEFING REPORT

GENERAL GOVERNMENT DIVISION, WASHINGTON, D.C.

Michael Brostek, Assistant Director

 

Mary Phillips, Assignment Manager

 

Robert McKay, Evaluator-in-Charge

 

Bryon Gordon, Evaluator

 

Pat McGuire, Senior Computer Specialist

 

Susan Baker, Computer Specialist

 

Katherine M. Wheeler, Publishing Advisor

 

Hazel Bailey, Writer-Editor

 

Rosa Hayes, Secretary
DOCUMENT ATTRIBUTES
  • Institutional Authors
    General Accounting Office
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    exempt organizations, compensation, officers and directors
    exempt organizations, social welfare
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 95-2992 (72 pages)
  • Tax Analysts Electronic Citation
    95 TNT 53-8
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