The $375 million organization lumps most of its expenses in a single line and reports no salaries paid at all, even though it lists an executive director as a key employee.
Ohio State University itself is a state university and isn't required to file a Form 990 with the IRS. However, OSU has set up a nonprofit subsidiary for its research grants, the Ohio State University Research Foundation (EIN 31-6401599 Form 990). As we noted in the accompanying article, OSU greatly increased its research program under retiring president Karen A. Holbrook, and it shows: the research foundation reported over $375 million in income in the year ended June 30, 2006.
Most of this income (about $367 million) is shown going out as payments to affiliates (on line 16). There's supposed to be a schedule attached showing where the payments went, but there is no such schedule attached. It would be logical that the payments would go to Ohio State University, but there's no positive confirmation.
What's left is about $7.4 million in expenses. Here's where the form get really coy. On page two, part II, the statement of functional expenses, there are a handful of lines completed, but none relating to salaries. Then there's an additional expense line labeled Administrative Services in the amount of $6,671,032. There is no further information. All these expenses are listed in program expense column, although from the description they should appear in the column for management and general expense.
Now, back in the back (page 15 of the pdf file), an interim executive director is identified, but it's on a list of officers, directors, and key employees that shows only names, addresses, and titles. It leaves off the columns relating to compensation. Yet it's very unlikely that an executive director of an organization this size, even an interim, would be working without pay.
And back on line 90b (page 7 of the pdf file) the organization reports that it employed 115 people. But no salary or benefit expense is reported.
I speculate that the the subsidiary employs staff paid by the university and the makes an accounting transfer to book the expenses to the subsidiary. But that internal accounting short cut is inconsistent with the reporting of a key employee and a staff headcount. If people can be identified as working for this subsidiary, their salaries and benefits should be in its expenses in Part II on lines 25 to 29. And the salary and benefits of the key employee need to be listed in the schedule.
The form lists Deloitte & Touche LLP as a vendor being paid $89,675 for audit services. But their name is not listed as the preparer of the Form 990. The only name that appears is that of an executive director (a different name than the interim director in the list of officers etc.) The typeface in the form suggests that they used the fill-in Form 990 from the IRS web site.
What this form indicates to me is that OSU does not take the Form 990 seriously. We have seen this before from a major university (Yale's Wacky Form 990, February 21, 2007). And it calls into question the IRS' monitoring of these filings if errors this significant are allowed to pass. There are fewer than 2,000 returns reporting income over $100 million, yet they account for three-fifths of the total income of all charities. There is no reason why someone in the exempt organizations section can't be looking at all of them to screen out these obvious flaws.