SD13 - Plan for the Development of a System and Review Process to Implement and Maintain a Statewide Database of Nonprofit and Not-for-Profit Entities that Could be Accessed by all Virginians Via the Internet

Executive Summary:
One of the recommendations from the SJR 219 (2000) study of ongoing or permanent commercial activities of not-for-profit organizations and their effect on state revenues was the need for a statewide database of these organizations. There are over 36,000 organizations in Virginia that are granted tax exempt status by the Internal Revenue Service (IRS). Nationwide, there are over 1.25 million. Further, there are at least six Virginia government agencies that deal with exempt organizations in varying degrees, but the Commonwealth Competition Council found there was no central repository on these organizations and in only one instance a sharing of data.

Similarly there was little data available on the vast number of independent Authorities that are authorized in Virginia. The General Assembly and local governments, enabled by the Code of Virginia, create these entities. Originally the number of such quasi-governmental organizations identified during the SJR 219 study last year totaled 433. Currently, over 500 have been identified, and it appears the number is continuing to rise as other Authorities are identified. In addition, some 98 "Special Districts" have also been identified, but the Competition Council has not collected data on these entities at this time. Initial findings reflect a total of $17 billion in outstanding debt identified in 110 of these Authorities.

Based on the findings and recommendations of SJR 219 to the Governor and 2001 General Assembly, SJR 382 (2001) was passed by the General Assembly requesting the Commonwealth Competition Council to coordinate the development of a plan to provide for a database of such organizations, including Authorities and cooperatives, to be available on the Internet.

A taskforce was formed from the six agencies, Charitable Gaming Commission, Office of the Attorney General, Department of Taxation, State Corporation Commission, Department of Agriculture and Consumer Services, and the Commonwealth Competition Council, plus the Virginia Information Providers Network (VIPNet), local Commissioners of the Revenue, private businesses, nonprofit or not-for-profit organizations, the Virginia Municipal League, the Virginia Association of Counties, and the Auditor of Public Accounts. The vastness of the potential databases dictated that the study be divided into two specific areas of emphasis:

1. Nonprofit or not-for-profit organizations
2. Authorities

The decision was made by the Commonwealth Competition Council to exclude cooperatives from this plan due to the magnitude of material.

The taskforce concluded that the information in a public forum, such as the Internet, would provide a valuable public service not only to individuals, nonprofit or not-for-profit organizations, and Authorities, but to businesses and governments (federal, state, and local) alike. The use of technology would greatly enhance the creation of two databases, one on nationwide exempt organizations and one of Virginia Authorities. Both groups recommended a phased-in approach, with a review of the use of the data, and modifications made in future phases depending on further analysis and use of the information.

The IRS has made available a nationwide listing of the exempt organizations. It is proposed to utilize this data and download it into a Virginia website that would be searchable through a variety of means. A survey is recommended to be undertaken to determine the number of Authorities that are serving the localities and state government. This will determine the actual number for placement on the Internet database.

It is recommended by the Commonwealth Competition Council that action be undertaken to establish these two databases, and to seek funding in the amount of $23,500 the first year and $15,000 the second year to provide for the technical capabilities needed to accomplish this service. Funding sources could be provided:

• by direct appropriation

• through Treasury borrowings to be re-paid by data mining opportunities resulting from the dissemination and aggregation of data through VIPNet or

• by deferral of costs by VIPNet, if agreeable, with recovery to be obtained based on the commercial use of data.

It is further recommended that the Commonwealth Competition Council explore any and all revenue sources from the mining of the data in both the nonprofit database and the Authorities database.