5 Things You Need to Know About 990 Information for Nonprofits

As a nonprofit organization, transparency and accountability are critical to building trust with your stakeholders. One of the key ways to achieve this is by filing a Form 990 with the IRS. This form is a public record that provides information about your organization’s finances, governance, and activities. Here are five things you need to know about Form 990.

1. What is Form 990?

Form 990 is an annual information return that most tax-exempt organizations must file with the IRS. It provides detailed information about the organization’s activities, governance, and finances. The form has several sections, including:

– Part I: Summary of mission, activities, and governance
– Part II: Signature block and officer information
– Part III: Statement of program service accomplishments
– Part IV: Checklist of required schedules
– Part V: Statements regarding other IRS filings and tax compliance
– Part VI: Governance, management, and disclosure
– Part VII: Compensation of officers, directors, trustees, key employees, and highest compensated employees
– Part VIII: Statement of revenue
– Part IX: Statement of functional expenses
– Part X: Balance sheet
– Part XI: Reconciliation of net assets
– Part XII: Financial statements and reporting

Each of these sections provides important information about your organization’s activities and finances, and helps demonstrate your commitment to transparency and accountability.

2. Who needs to file Form 990?

Most tax-exempt organizations must file Form 990. This includes:

– Charitable organizations
– Educational organizations
– Religious organizations
– Scientific organizations
– Literary organizations
– Amateur sports organizations
– Social welfare organizations
– Business leagues
– Chambers of commerce
– Labor organizations
– Agricultural organizations
– Horticultural organizations

There are some exceptions to this requirement, such as churches and certain other religious organizations. However, even if your organization is not required to file Form 990, it may still be a good idea to do so voluntarily. This can help demonstrate your commitment to transparency and accountability, and may be required by some donors or grant-making organizations.

3. When is Form 990 due?

Form 990 is due on the 15th day of the 5th month after the end of your organization’s fiscal year. For example, if your fiscal year ends on December 31st, your Form 990 would be due on May 15th of the following year. If you need more time to file, you can request an extension by filing Form 8868. This will give you an additional six months to file your form.

4. What are the consequences of not filing Form 990?

Failing to file Form 990 can result in several consequences. First, your organization may lose its tax-exempt status if it fails to file for three consecutive years. This can have serious implications for your organization’s ability to raise funds and operate. Additionally, the IRS can impose penalties for late filings or failure to file, which can add up quickly. Finally, failing to file Form 990 can damage your organization’s reputation, as it may be seen as an indication of poor governance or lack of transparency.

5. How can you ensure a successful Form 990 filing?

To ensure a successful Form 990 filing, it’s important to plan ahead and gather all the necessary information in advance. This may include financial statements, board meeting minutes, and other documentation that supports your organization’s activities and finances. It’s also a good idea to consult with a tax professional or attorney who is familiar with nonprofit law and can help you navigate any complex issues that may arise. By taking the time to prepare properly and file Form 990 on time, you can demonstrate your organization’s commitment to transparency and accountability, and build trust with your stakeholders.

Conclusion

Filing Form 990 is an essential step for any nonprofit organization that wants to demonstrate its commitment to transparency and accountability. By providing detailed information about your organization’s activities, governance, and finances, you can build trust with your stakeholders and ensure that you are complying with IRS regulations. By understanding the requirements and planning ahead, you can ensure a successful Form 990 filing and demonstrate that your organization is committed to serving its mission and making a positive impact in the world.