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    Breaking down notoriously confusing, perplexing and annoying systems and practices in higher education


Information Institutions Can’t Hide

Where to track down financial statements, tax forms and other key information that nonprofit colleges and universities don’t necessarily make it easy for you to find.

March 15, 2022

An institution’s website is like an old-school pep rally: lists and stats shout, “We’re No. 1 (on some list, somewhere, for something)!” Ubiquitous images paint a picture of happiness and prosperity—students studying outdoors, a donor presenting a check to someone, and a dramatic video of campus shot with a drone. Everything looks so ideal on the .edu, and then a ding announces an email calling for an all-campus meeting about the institution’s dire financial health. Everyone thinks (and some reply with a three- to five-page diatribe), “What in the hell is going on here? Why didn’t we know? We need transparency!” But in the words of The X Files’ Fox Mulder, the truth is out there. You just need to know where to look.

Many people think the only way to obtain truthful information from a public institution is by filing a Freedom of Information Act request. Established in 1967, FOIA is the “law that keeps citizens in the know about their government. Federal agencies are required to disclose any information requested under the FOIA,” with some exemptions. While FOIA affords an avenue to learn more about public institutions, other readily available information exists about both public and private institutions.

U.S. federal law requires certain forms and reports to be filed annually. They must be truthful, accurate and filed according to deadline under penalty of law. A few include an audited financial statement, Internal Revenue Service Form 990, and an Integrated Postsecondary Education Data System report. All detail information regarding an institution’s fiscal and operational health. An institution’s credit rating and financial outlook can be found on rater websites such as Moody’s Investors Service, Standard & Poor’s Global and Fitch.

The following information provides insights into these four sources, including the purpose of data gathering, what you can learn, and where to find it. Some clarifications and caveats are listed, too.

Audited Financial Statements

Purpose: The U.S. Internal Revenue Service requires nonprofits to prepare audited financial statements annually. Independent external certified public accountants prepare the report using generally accepted accounting principles. The financial statements are evaluated by independent auditors using generally accepted auditing standards. The statement provides information about the institution’s financial position and performance.

What you can learn: An audited financial statement for nonprofits includes five parts: audit report, statement of financial position, statement of activities, statement of cash flows and notes.

  • The audit report indicates the auditor’s opinion on whether management has provided “true and fair” statements: unqualified (good), qualified (not good), adverse (bad) or disclaimer (likely bad, but not enough information to determine).
  • The statement of financial position details assets and liabilities: Are assets growing year over year? Good. Are there more assets than liabilities? Good. Disclaimer: Having a great deal of real or personal property as assets may not be a good thing for your institution if there is not enough cash on hand to operate (see the statement of cash flows). More liabilities than assets? Not good and likely bad.
  • The statement of activities details revenue and expenses. Is revenue stable, growing or declining? Are expenses stable, growing or declining? Compare revenue to expenses. Is revenue lagging expenses? Bad.
  • The Statement of cash flows provides information about how much cash is generated (operating, investing and financing activities) versus how much is spent. It indicates an institution’s ability to pay its bills.
  • Notes (or footnotes) provide context for understanding how the institution functions and note any unusual activities. Always read the notes. If something is important and requires additional explanation, it will be in the notes.

Where to find it: Typically, these statements can be found on the institution’s website under the administration and finance office. Sometimes a summary can be found in the institution’s annual report. A copy can be requested from the comptroller’s office. In addition to a statement for the institution, public institutions have audited financial statements for each separate but related foundation or organization that receives and manages assets in support of the institution.

Notes: Reading audited financial statements isn’t for amateurs. No matter how smart you are, if you don’t have a CPA, you are an amateur. (And, no, having a mathematics degree isn’t the same as a being a CPA.) Get over yourself and ask for help interpreting these statements.

U.S. Internal Revenue Service Form 990

Purpose: According to the IRS, “Form 990 is the IRS’ primary tool for gathering information about tax-exempt organizations, educating organizations about tax law requirements, and promoting compliance. Organizations also use Form 990 to share information with the public about their programs.”

What you can learn: Information from the audited financial statement is used to complete the IRS Form 990. The 990 slightly easier to understand, but not by much (and doesn’t include the auditors’ opinion). Bonus material: the compensation for the highest-paid individuals at the institution is listed on the 990.

Where to find it: GuideStar Nonprofit

Notes: Access to the site requires registration, but there is no fee to review basic information. Typically, several years of 990s are listed on this site for each institution. Comparing several years of 990s may be a useful way to identify trends.

Private institutions are listed on GuideStar. Since public institutions are governmental agencies, they are not listed here. However, private foundations associated with public institutions are listed by their official names (not by the name of public institution alone—i.e., _______ Foundation Inc.). Also, the financial information listed for a public institution’s foundation only relates to the foundation’s operations (not the entire institution). Does that make sense? No? Just go on the site and look around. Trust me.

U.S. Department of Education’s National Center of Education Statistics Integrated Postsecondary Education Data System

Purpose: According to the NCES, “IPEDS gathers information from every college, university, and technical and vocational institution that participates in the federal student financial aid programs. The Higher Education Act of 1965, as amended, requires that institutions that participate in federal student aid programs report data on enrollments, program completions, graduation rates, faculty and staff, finances, institutional prices, and student financial aid.”

What you can learn: Basically, every statistic about an institution is here, and institutions can be compared with apples-to-apples data. There are 14 categories of information—general information; tuition, fees and estimated student expenses; financial aid; net price; enrollment; admissions; retention and graduation rates; outcome measures; programs/majors; service members and veterans; varsity athletics teams; accreditation; campus security and safety; and cohort default rates.

Where to find it: College Navigator

Notes: Damn. This whole thing—IPEDS—it’s beautiful. Seriously. I’m in love with IPEDS. You can lose yourself in the succinctness of it all. So much data in one place. I want to marry IPEDS.

Additional information: IPEDS Data Center allows you to compare institutions. Learn about the IPEDS Survey components. So much love.

Credit Rater Example: Moody’s Investors Service

Purpose: Moody’s conducts research for commercial and government bonds and provides financial outlooks and credit ratings for various sectors and institutions. The information affects an institution’s ability to secure loans and is a determining factor for interest rates.

What you can learn: Moody’s rates both the higher education sector as a whole and many but not all institutions. Moody’s characterizes a financial outlook as either positive, stable, negative or no outlook. In addition to indicating the overall outlook for a specific institution, Moody’s provides an investment risk or creditworthiness rating. The lowest to highest risk ratings are Aaa, Aa, A, Bbb, Bb, B, Ccc, Cc, C. After each rating, it is noted if the change was an upgrade or downgrade from the previous rating. Bottom line: before you accept a job offer, check the institution’s rating (among other things) to know what you’re up against and to make sure your new employer can actually pay you. Don’t say you weren’t warned.

Where to Find It: Moody’s Higher Education and Not-for-Profit Organizations

Notes: Access to the site requires registration, but there is no fee to review basic information. The list of institutions is alphabetical. Not all institutions are included. Current and past ratings can be found by clicking on the institution. Two other sources for higher education ratings are Standard & Poor’s Global and Fitch.

Additional information: Moody’s methods for higher education can be found here.


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