Editors’ Note: education scholar Sarah Reckhow continues HistPhil‘s forum on archives and knowledge management. Her post examines how new institutional forms within the sector are reshaping and constraining philanthropic research, and what this might mean for the philanthropy archives of the future.

The Chan Zuckerberg Initiative (CZI) has received substantial media attention and scrutiny during its first year in existence. In that coverage, it is often characterized as a philanthropic organization. For example, a recent New York Times article on CZI’s plans to hire former Obama campaign manager, David Plouffe, bears the headline “Chan Zuckerberg Initiative Builds Political Muscle for Philanthropic Work.” Yet, as media coverage has widely noted, CZI is not a private philanthropy—it is a limited-liability company (LLC). Many have commented on the implications of the LLC status for issues like taxes, for-profit investing, and political giving. As a political scientist who studies philanthropy, I worry about the implications of the LLC for philanthropic research. My work rarely draws on historical archives, but I rely heavily on archives of a different sort: philanthropic data and documents covering the last 15-20 years that are stored online.

When I began my dissertation research almost 10 years ago, I knew that I wanted to “follow the money.” I planned to tabulate all of the grants from major funders in K-12 education—identifying the recipient and their location. Initially, I had no idea how to accomplish this, and I spent many hours at the Foundation Center library in New York City pondering large books filled with lists of grants. After many fits and starts, I settled on a research strategy using 990-PF tax returns. These documents provided several advantages compared to the Foundation Center data:

• The reporting for a given year on the 990 accurately represents dollars dispersed in that year. I found that Foundation Center data sometimes reported a multiyear grant as if it were distributed in a single year, which can badly skew funding totals.
• There is greater assurance that the 990 will have every grant reported, there is no minimum based on grant size and there are no hidden choices about grant categorization. I found that the Foundation Center sometimes excluded small grants (which could have great substantive interest to me) and relied on funders for the categorization of grants (which meant categories might be inconsistent across different funders). On the tax returns, funders are expected to report all of their grants, because this reporting to the IRS demonstrates that they have met minimum payout requirements for the year.

Of course, the 990-PF has its drawbacks. Rather than relying on predetermined categorization of education grants by the Foundation Center, I made my own decisions about which grants to include. This typically meant reviewing every single grant reported on each foundation’s 990 (my eyesight suffered). Also, back in 2007, the PDF’s of 990s were only available as image files and never machine-readable. It was impossible to copy and paste from these forms, so each entry had to be retyped into a spreadsheet. Thankfully, we are moving into an exciting new era of machine readable documents from the IRS. Meanwhile, the Foundation Center continues to make strides to improve the availability and search capabilities for grant data through its website. Although my colleague Jeff Snyder has recently found some discrepancies between 990-PF and Foundation Center data for certain foundations, the overall availability of data originating from the 990 through online sources continues to improve.

Once the tedious work of transferring and coding data from the 990s for my dissertation was complete, I was thrilled to have a trove of information about where foundations directed their grants in K-12 education. This information was essential for writing my book, as well as articles with Jeff Snyder. The 990 data is particularly valuable for studying philanthropy as a sector (as opposed to doing case studies of a single funder), because the tax returns provide directly comparable data across different funders. This enables large-N data analysis; I could combine 990 data for 15 major K-12 funders and develop models to predict how and where the top funders in the sector were engaged in education. It also provides empirical evidence to examine broad trends in funding—for example, declining philanthropic funding for traditional public schools and rising funding for charter schools.

Unfortunately, as I look ahead, I’m doubtful about replicating my earlier analysis of K-12 giving. This is particularly disheartening, and ironic, given that 990 data is finally becoming much more accessible. The new challenges to gathering philanthropic data do not stem from the IRS, but instead from the rise of new and prominent LLCs.

CZI is not alone as a major LLC funder involved in K-12 education. Laurene Powell Jobs also created an LLC, Emerson Collective, to coordinate her giving and investments. These organizations are becoming major K-12 funders, devoting millions to educational reform efforts. Yet LLCs are not required to report their giving on tax returns because they are not private foundations (they also do not receive the tax benefits of a private foundation). In fact, they are not required to report anything about their nonprofit giving. Currently, the CZI website provides minimal information about its initiatives, although journalists have managed to track various funding streams from Zuckerberg projects. Powell Jobs described the minimal transparency requirements on LLC giving as a primary reason for her decision to create an LLC: “doing things anonymously and being nimble and flexible and responsive are all things we value on our team.” (There are some parallels between the challenges scholars face studying LLCs and studying donor advised funds.)

Of course, there was always the possibility that my data collection strategy left out major funders—for instance, an individual could have directly given a multi-million dollar gift to a charter school that would not show up in my analysis of philanthropic giving. Yet Emerson Collective and CZI are not individuals—these are organizations that resemble traditional philanthropic organizations in many respects, including their aspirations for social change and their support for the nonprofit sector. They are hiring professional staff (including many former members of the Obama administration), and they are showing a desire to strategically influence educational policy. Yet from a transparency perspective, their giving is treated no differently from the contributions of individuals. Unless organizations like Emerson Collective and CZI choose to voluntarily report their nonprofit contributions annually, there’s no guarantee that this information will be available. And if more high net-worth individuals choose to follow the footsteps of Zuckerberg, Chan, and Powell Jobs, the discrepancy between the size of the footprint made by the philanthropic sector and our ability to empirically examine its impact on the ground below will grow even larger.

-Sarah Reckhow

Sarah Reckhow is assistant professor of political science at Michigan State University. She is the author of Follow the Money: How Foundation Dollars Change Public School Politics, which received the Virginia A. Hodgkinson Research Book Prize in 2014.