IRS Form 990 vs.

GAAP Reports

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Distinguish between the annual Form 990 and the audited annual financial statements

Determine the likely recipients of each one

Identify the typical reasons why a Form 990 and annual auditor report may need to be reconciled (see Part IV-A and B Reconciliation)

Describe the “revised” 2008 Form 990

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Form 990 Audit

Report

Accounting Method Cash

or

Accrual

GAAP

(accrual)

Who receives it? IRS;

Public through www.guidestar.org

Board; funders;

state/ oversight body

Required to be publicly available?

YES NO

If Form 990 is prepared on a GAAP basis, there won’t be any reconciling items.

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• REVENUE– Net unrealized gains on investments– Donated services and use of facilities– Recoveries of prior year grants– Investment expenses

• EXPENSES– Donated services and use of facilities– Prior year’s adjustments– Losses reported as change in net assets– Investment expenses– Depreciation expense

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All NPOs that are tax-exempt under IRC Sec. 501, although some may be able to do a postcard Form 990-N

Private foundations file a Form 990-PF Note that churches are not required to file Form

990s. The separation of church and state in the U.S. means churches do not need to apply for exception from federal taxes. However, the IRS can challenge whether an organization is a church.

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Financial and nonfinancial, such as: Balance Sheet, Statement of Revenues and

Expenses Details of Revenue Sources and Functional

Expenses List of officers and key employees with

compensation Largest contributions with donors’ names Lobbying expenses Statements of program services accomplishments

What Information is Available on a Form 990?

Include parts of Revised Form 990 (for 2008 and beyond)

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IRC Sec. 501(c)(3) organizations must provide their last three year’s Form 990, EZ, BL, Form 1065 (but not Form 990-T), and exempt application immediately to anyone requesting them in person, within 30 days for mail-in/fax/e-mail requests. ◦ IRS Announcement 99-62 effective June 8, 1999

and IRC Sec. 6104, 6652, 6685.◦ Copying and postage fees may be assessed ($1

for first page, $.15 each subsequent page plus actual postage).

◦ Names and addresses of contributors may be omitted (from 990s, but not 990-PFs).

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Penalties for not meeting the public disclosure rules for Form 990s are $20 a day up to a maximum of $10,000 assessed on the person(s) who was responsible (double the old rules).

“Willful” failure results in additional penalties of $4,000.

Could post forms on the Internet so they are “widely available” if the format exactly replicates the form, e.g., PDF

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www.guidestar.org

Individual NPO’s Web sites

State “Nonprofit Corporation” office

Call or stop in the NPOs office

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• Urban Institute www.urban.org • National Center for Charitable Statistics

(NCCS) www.nccs.urban.gov • Independent Sector

www.independentsector.org • Association of Fundraising Professionals

(NSFREE) www.nsfree.org • National Council of Nonprofit

Associations www.ncna.org • IRS www.irs.gov then Charities

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