Serving on a Not-for-Profit Board? You should be familiar with Form 990

Posted on 08.01.17

Serving on a Not-for-Profit Board? You should be familiar with Form 990

By Ginny Belcher, CPA, Tax Senior Manager | Keiter Not-for-Profit Team

The Internal Revenue Service (IRS) believes that an active and engaged governing board is essential to the success of any exempt organization.  As fiduciaries of the organization, the board works to insure that the organization has the resources to advance its mission and helps steer the organization to a sustainable future by adopting sound legal and ethical governance and financial management policies.  Therefore, it is essential that the board understand the organization’s activities as well as applicable tax laws.  For this reason, the Form 990 ask the two questions: 

  1. Has the organization provided a complete copy of the Form 990 to all members of its governing body before filing the form?

  2. Describe in Schedule O the process, if any, used by the organization to review the Form 990.

The first question on the Form 990 asks if the organization provided a copy to the board prior to filing.  While an affirmative answer is preferred, it does necessarily assure that the board has actually reviewed a copy of the Form 990 either before or after filing.  A negative response may be perceived as poor governance as the Form 990 is a widely available public document.

The second question asks for a description of the process, if any, the organization uses to review the Form 990.    Given that the Form 990 is open to the public, it is important that organizations develop a policy for review to ensure that the information reported on the Form 990 is accurate and best reflects the organization and its values.

While the Form 990 can be overwhelming, the information it provides, financial, program accomplishments, compensation and governance policies, should all be familiar to a board. 

Interested in learning more about this topic? We will provide guidance for board members when reviewing the Form 990 at our upcoming Not-for-Profit seminar. E-invitations will be sent to our Not-for-Profit newsletter recipients.  Not on our newsletter mailing list? Contact us. | 804.747.0000

The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

Posted by: Virginia R. (Ginny) Belcher, CPA

Ginny Belcher, Senior Tax Manager, dedicates the majority of her time to serving not-for-profit clients. Ginny is focused on high level client service and partners with not-for-profit organizations to assist them in reaching their program goals.  Ginny is a leader in Keiter’s not-for-profit industry team. Read more of Ginny’s not-for-profit tax insights on our blog.