Form 990 is an Information Return required to be filed by certain nonprofit organizations. Form 990 provides the public with financial information about a nonprofit organization, including information about an organization's revenues and expenses. The Internal Revenue Service (IRS) has issued helpful tips to guide organizations through completing the information required on the Form1 . In this article, we summarize several of those tips. 

1. Be sure you file the proper version of Form 990 for your tax period:

  • Make sure you are filing the right form, and for the right year. 

2. Double check your identifying information: 

  • Make sure your EIN, tax period, and Group Exemption Number (GEN) if applicable are accurate. Double check that the correct IRS subsection for your organization is indicated. This information can be found in your organization’s IRS determination letter.

3. Complete Parts I through XII, and make sure to sign:

  • Make sure all parts are complete on your form 990, and that you have provided a signature where necessary.

4. Scan to make sure you have not included any unnecessary, personally identifiable information:

  • 990’s are made publicly available by the IRS. Including any personally identifiable An Overview of IRS Guidance for Completing Form 990 information, such as a person’s address, email, or phone number, could contribute to identity theft. 

5. Determine which schedules are required:

  • By completing the Checklist of Required Schedules, you can determine which schedules are required. Make sure to fully complete and attach all the required schedules.

Filing tax forms, whether individually or on behalf of an organization, can be a daunting task. These best practices can help to alleviate some of that stress and provide guidance toward completing them correctly. 

Our View

The Form 990 is an important requirement for a nonprofit organization looking to maintain its tax-exempt status. Incorrect information on the Form 990 can lead to loss of tax-exempt status and even potential lawsuits from donors and other stakeholders. Please consult with a tax and/or accounting services firm for assistance.

Filing Form 990 correctly also can be used to demonstrate responsible stewardship and management to prospective donors and other key stakeholders. Funders may use Form 990 as a tool to assess the eligibility of a grantee, and so understanding the form and how to utilize it is important for both parties. 

Below are some key examples of financial insights that can be drawn from the Form 990: 

  What it means How it may be used
Profitability Profitably measures a nonprofit’s ability to cover expenses with revenues. If unrestricted funds are leftover after all programmatic and operational expenses have been met, then that organization runs a surplus. If revenues in a single year do not cover that year’s expenses, then they run a deficit. It may not make sense to think of profitability in the nonprofit world, but it’s important to know whether your organization ran a surplus or deficit, and whether there are any trends in this area over the past several years. If a nonprofit organization consistently runs at a deficit, it may be time to assess expenses or revisit fundraising efforts.
Revenue Composition Revenue composition refers to the mix of inflow of funds, including grants, contributions, program revenues and investment income among others. A nonprofit’s revenue should be a diversified mix, and relatively stable over a period of time. Events like a capital campaign, or economic downturn impacting programming revenues, could create variability. Being able to identify these impacts and tell the story around them is crucial.
Expense Composition Expense composition refers to the mix of outflows, or areas where your organization is supporting with capital. Expenses give a glimpse into what the key mission-related activities are for any nonprofit. For a majority, personnel costs are the largest expense. There may be variability in expenses year to year, but it may be a good exercise to determine if any major expenses are not helping your organization to move the needle in terms of mission advancement.

The full IRS article with information can be found here: Filing Tips for Form 990 (IRS). We recommend seeking the help of a tax professional to assist with filing requirements. 

The Form 990 is an important requirement for a nonprofit organization looking to maintain its tax-exempt status.

To learn more about our nonprofit solutions, visit pnc.com/iam. 

1 https://www.irs.gov/charities-non-profits/filing-tips-for-form-990-tax-years-2008-and-later