The Nonprofit FAQ
| What is Form 990? How is it Used? |
| Putnam Barber posted this further information in January 2008: In December 2007, the IRS published a new and significantly revised version of Form 990, which many organizations will use for reporting on their operations during 2009. The new Form 990 employs a "core form" which every organization using this form will complete, and a series of schedules that focus on, and collect information about, specific areas of concern (like employee compensation) or specific sorts of activities (like operating a hospital or a school). The IRS expects that most organizations will find it necessary to use only a few of these schedules. Compensation: While the IRS has always forced nonprofit organizations to disclose the salaries and benefits of its officers, directors, trustees, and key employees, the IRS now also requires that such key figures be listed even if they receive no compensation at all. For a discussion of who benefits from illegal NPO activities, see: http://www.idealist.org/if/i/en/faq/82-46/9-3 . For a further discussion of compensation as related to NPO boards, see http://www.idealist.org/if/i/en/faq/11-77/3-1 . For general FAQs regarding compensation, visit: http://www.idealist.org/if/i/en/faqcat/33-11 . Accomplishments of Program Services: The IRS now requires that 501(c)(3) & (4) organizations report total expenses and revenue as well as the amount of grants received for each of their three largest service programs. For questions surrounding a NPO’s “Mission and Purpose” see: http://www.idealist.org/if/i/en/faqcat/16-27 . Expenditures: Additions include expenses related to lobbying, management, financial services, insurance, royalties, information technology, as well as fees related to promotion and advertising. For issues surrounding budgets and finance see: http://www.idealist.org/if/i/en/faqcat/31-71 . Foreign Activity The IRS has included Schedule F to collect extensive data regarding foreign activity. As Not-For-Profit Alert guides us, “if you have revenue or expenses of more than $10,000 from foreign activities, or grants of more than $5,000 to any person or organization outside the US, data will have to be reported by region and must include a description of activities and expenditures by region and also include information about offices and employees.” (from: http://www.nfpnet.org/HHSPRING_insertFINAL.pdf) Fundraising: Schedule G has been added to help further uncover noncompliance when it comes to activities surrounding fundraising and gaming. In particular, this schedule has been included in order to address the difficult issue of determining exactly how many donor dollars reach a charity. For general questions regarding fundraising, see: http://www.idealist.org/if/i/en/faqcat/110-77 . For a further discussion of the IRS’s regulation of gambling revenues, visit: http://www.idealist.org/if/i/en/faq/226-244/62-42 . Governance: On this topic, the IRS has added questions that cover the manner in which their 990s are reviewed before filing. In particular, conflict of interest issues surrounding officers, directors, trustees and key employees are addressed through direct questions about the enforcement and monitoring of compliance policies. Finally, a question regarding the protection of “whistle-blowers” has been added in recognition of the fact that employees are often the primary source in uncovering fraudulent or illegal activities by nonprofit organizations. For a helpful guide to “whistle-blowing” see: http://www.idealist.org/if/i/en/faq/87-96/74-89 . For a how-to if you are an employee of an NPO who suspects and/or has evidence of fraudulent activities, see http://www.idealist.org/if/i/en/faq/86-26/12-47 . For a discussion of “Board Basics,” see: http://www.idealist.org/if/i/en/faq/526-245/62-42 . In-Kind Gifts: With the inclusion of schedule M, nonprofit organizations now must report revenues received from 24 different categories of in-kind gifts (including artifacts, clothing, books etc.). This item will most certainly require new systems of record-keeping as organizations will now have to report the precise number of donations recieved in many of these categories. For a further discussion of In-Kind Gifts, visit http://www.idealist.org/if/i/en/faq/234-148/62-42 . Lobbying: As Not-For-Profit Alert advises: “A new schedule requires all section 501(c) & 527 (political) organizations to report the number of volunteer hours devoted to direct or indirect political campaign activity… Other 501(c) organizations will need to provide greater detail about campaign participation activities with a breakdown between the amount spent directly for these activities in the amount contributed to other organizations to carry on these activities.” (from: http://www.nfpnet.org/HHSPRING_insertFINAL.pdf). For of a summary of federal rules about lobbying for 501(c)(3) organizations, see http://www.idealist.org/if/i/en/faq/230-14/62-42 . For further questions about issues surrounding lobbying, see: http://www.idealist.org/if/i/en/faqcat/63-12 . In Sum: Some organizations will find that new information and new levels of detail will need to be reported about their work when they use the new form. Recognizing that collecting and presenting this newly required information may pose difficulties for some organization and in some cases, the IRS has delayed implementation of some parts of the Form. Also, starting with filings for 2008, a larger number of organizations will be permitted to file Form 990-EZ, which has not been changed. The new thresholds for transitioning from the 990-EZ to the full form 990 will be $200,000 gross receipts or $500,000 total assets. For two years, 2008 and 2009, these thresholds will be even higher: For the 2008 tax year (returns filed in 2009), organizations with gross receipts over $1.0 million or total assets over $2.5 million will be required to file the Form 990. For the 2009 tax year (returns filed in 2010), organizations with gross receipts over $500,000 or total assets over $1.25 million will be required to file the Form 990. Detailed information about the new Form and filing requirements can be found on the IRS website at http://www.irs.gov/newsroom/article/0,,id=176722,00.html Some Useful Links regarding the new 990: The American Hospital Association’s comments on the revised 990s. (Useful for more than just Hospitals): http://www.aha.org/aha/letter/2008/080515-cl-irs-990.pdf The IRS’s notes on its redesigned 990 in response to over 650 comments regarding the Discussion Draft: http://www.irs.gov/pub/irs-tege/background_paper_form__990__redesign.pdf The IRS’s annotated walkthrough of the Revised 990s: http://www.irs.gov/charities/article/0,,id=181093,00.html David A. Paddock’s, “IMPACT OF FORM 990 CHANGES TO EXEMPT ORGANIZATIONS”: http://www.tatetryon.com/articles/documents/167/0106%20Impact%20of%20Form%20990%20Changes%20to%20Exempt%20Organizations.pdf Putnam Barber posted this explanation in September 2003: Form 990 is the Annual Information Return which must be filed with the Internal Revenue Service within four-and-a-half months following the end of the its fiscal year by most tax-exempt charities (501(c)(3)s) and social welfare organizations (501(c)(4)s). Organizations with few assets or limited revenue are not required to file, nor are churches and related organizations that need not register to document their tax-exempt status. Blank forms, and the IRS instructions for completing them, can be found on the IRS website, along with other useful information for exempt organizations, at http://www.irs.gov/charities/article/0,,id=96774,00.html. A wide-ranging discussion of Form 990 from the "Continuing Professional Education (CPE) Technical Instruction Program for FY 2002" is available from http://www.irs.gov/charities/article/0,,id=96251,00.html. With support from the Ford Foundation, Peter Swords, formerly the director of the Nonprofit Coordinating Committee of the City of New York, prepared How to Read the IRS Form 990 & Find Out What It Means. In it, Swords offers a list of the "ten most significant pieces of information that can be found in the Form 990" and shows exactly where to find the information. Throughout Swords' piece there are detailed explanations on certain points for those readers who want to learn more about certain subjects. In addition, the piece offers some background on and explanation of the 990 and explains why this filing is important for public accountability purposes." (From the NPCC website) NPCC announced in November 2001 that the complete text of How to Read the IRS Form 990 is available through http://www.npccny.org/Form_990/990.htm. The 2005 Edition is now online at the same address. Since publication, this page has been viewed over 45,000 times; people look at it about 1,600 times every month! In addition, NPCC has just published Swords' new work, Form 990: A Detailed Examination. This 120-page online book is an in-depth examination of sections of the IRS Form 990. Form 990: A Detailed Examination is geared for those who thirst for an even greater exploration of the intricacies of the Form 990 beyond the ten points explored in How to Read the IRS Form 990." This new publication is online at http://www.npccny.org/More_990/990.htm. (Announcement from NPCC in September 2003.) Since 1999, organizations that file 990s have been required to provide copies to anyone who requests them; these requirements were discussed in a "Bulletin" published at the Internet Nonprofit Center as http://www.idealist.org/npofaq/0/1575.html Copies of most organizations recent 990s have been made accessible to the public by Philanthropic Research, Inc., at its website http://www.guidestar.org/. The Form 990 Project (http://www.form990.org) of the National Center for Charitable Statistics is focused on improving the way the information in organization's 990s is prepared, transmitted, reviewed and published -- both to lower the burdens of filing for organizations and to make the resulting information more accessible to and useful for researchers and other observers of the nonprofit sector. Earlier, he posted this explanation in July 2001. The IRS has required an annual information return from most tax-exempt ("nonprofit") organizations since the 1940s. The form requires these organizations to document continuing eligibility for exempt status and to provide detailed financial and program information. The form is available to the public. By reviewing completed forms, members of the public can use the information to help decide whether or not they wish to support the organization with donations. Various regulatory bodies also review nonprofits' completed forms to check their operations for compliance with applicable laws.
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