Attachment G - Propensity Models for Performer and Funder Stratification

Attachment G. Propensity Models for
Performer and Funder Stratification

Propensity Models for Form 990 and Form 990-PF Stratification
The modeling included 99,869 organizations (1,705 likely performers or funders) for the Form
990 model and 17,827 (631 likely performers or funders) for the Form 990-PF model. Hospitals
were excluded from the modeling because they will be a separate stratum and will require steps
to unduplicate the frame to not overlap with those that are eligible for the Higher Education
Research and Development survey (HERD).
For both the Form-990 and Form 990-PF models, we followed the following process:
1) Developed a base model with the classification variables available on the core file and
three major financial variables, total revenues, total assets, and gross receipts.
Base model:
Major NTEE Grouping (First Character)
NAICS code Major Sectors (First 2 digits)
Common Code (last 2 digits of NTEE)
Foundation Code
Gross receipts
Total Revenues
Total Assets
2) Calculated the individual effects of the financial variables by introducing to the base
model one at a time. For each financial variable, evaluated the continuous value (e.g. total
investment income) as well as a binary measure reporting a non-zero value for this
variable (e.g. 1 = positive net investment income; 0 = nonpositive net investment income)
3) Made all individual effects significant at 0.05 eligible for the final model building.
4) Tested for multi-collinearity—removed highly correlated variables or created variations
of the variable. For example, program revenue is highly correlated with total revenues so
we created a variable to represent the percent of program revenue (program revenue /
total revenue).
5) Used stepwise selection to select final variables for model.
The significant model effects for the Form 990 and Form 990-PF models are presented below.

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Form 990—Final Model
Variable

DF

WaldChiSq

ProbChiSq

NTEE major group

17

791.49

<.0001

NAICS

10

125.43

<.0001

NTEE Common code

7

113.22

<.0001

Reason for 501(c)(3) status

6

101.97

<.0001

Non-Private Foundation Reason Code

1

56.92

<.0001

Has positive revenue from sales of securities (0, 1)

1

132.76

<.0001

Has positive royalty income (0,1)

1

67.43

<.0001

Compensation for officers

1

50.95

<.0001

Has positive compensation for officers (0,1)

1

66.44

<.0001

Has positive tax exempt bond liabilities, end of year (0, 1)

1

44.05

<.0001

Has other income (0,1)

1

18.52

<.0001

Has positive total gross income from interest etc.: 170(b)(1)(A)(iv)+(vi)

1

37.18

<.0001

Has positive investment income (0,1)

1

10.98

0.0009

Payroll taxes

1

12.73

0.0004

Has retained earnings at beginning of year

1

26.69

<.0001

Total gross income from interest etc.: 170(b)(1)(A)(iv)+(vi)

1

23.01

<.0001

Has positive liabilities, end of year (0,1)

1

11.01

0.0009

Special events direct expenses

1

25.10

<.0001

Has positive net income (loss) from fundraising events (0,1)

1

59.54

<.0001

Has positive contributions from gifts and grants (0,1)

1

10.48

0.0012

Tables notes: 170(b)(1)(A)(iv) an organization which normally receives a substantial part of its support (exclusive of income received in the exercise or performance by such organization of its
charitable, educational, or other purpose or function constituting the basis for its exemption under section 501(a) from the United States or any state or political subdivision thereof or from direct
or indirect contributions from the general public, and which is organized and operated exclusively to receive, hold, invest, and administer property and to make expenditures to or for the benefit
of a college or university which is an organization referred to in clause (ii) of this subparagraph and which is an agency or instrumentality of a state or political subdivision thereof, or which is
owned or operated by a state or political subdivision thereof or by an agency or instrumentality of one or more States or political subdivisions

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Form 990-PF—Final Model
Variable

DF

WaldChiSq

ProbChiSq

NTEE major group

12

42.01

<.0001

NAICS

4

19.14

0.0007

Paid compensation to or reimbursed expenses of disqualified person (0,1)

1

15.98

<.0001

Has positive compensation for officers (0,1)

1

25.31

<.0001

Compensation of officers, directors, trustees, etc.

1

61.82

<.0001

Furnished goods, services, or facilities to a disqualified person (0,1)

1

19.95

<.0001

Has positive total disbursements for charitable purposes oper and adm exps (0,1)

1

15.74

<.0001

Provided a grant to an individual for travel, study, or other similar purposes (0,1)

1

11.93

0.0006

Provided a grant to an organization other than charity (0,1)

1

7.92

0.0049

Has positive other income (0,1)

1

11.21

0.0008

Has positive investments - corporate bonds, book value end of year (0,1)

1

6.88

0.0087

Has positive tax overpayment to be credited to subsequent year (0,1)

1

8.84

0.0029

Has positive investments - other, book value end of year (0,1)

1

6.08

0.0136

Has positive contributions, gifts, grants paid as per books (0,1)

1

8.25

0.0041

Has positive net investment income (0,1)

1

7.08

0.0078

Investments - U.S. and state government obligations, book value end of year

1

9.06

0.0026

Has positive cash - non-interest-bearing, book value end of year (0,1)

1

13.18

0.0003

Has positive total liabilities, book value end of year (0,1)

1

4.68

0.0305

Has positive interest on savings and temporary cash investments (0,1)

1

9.42

0.0021

Has positive assets alternative test (last 4 years) (0,1)

1

5.40

0.0202

Had investment expenses and disbursements

1

12.75

0.0004

Total excise tax based on investment income

1

4.30

0.0381

Borrowed/lent money or otherwise extended/accepted credit to a disqualified person?
(0,1)
Ratio of total fair market value of assets not for charitable purposes to total assets

1

3.85

0.0496

1

5.25

0.0220

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