Form 990 for tax-exempt organizations
Schedule O is an integral part of the annual filing of the Form 990 for tax-exempt organizations. Its main purpose is to provide narrative information required by the IRS for responses and specific questions on the Form 990 or to explain the reason for amending a return. But is that all? Absolutely not, Schedule O offers a great opportunity to tell more of a tax-exempt’s story and spotlight their mission, programs, and accomplishments.
What to include:
When preparing Form 990 Schedule O or providing your tax preparer with additional information to tell your story, it is important to remember the following…
- Know your readers – your readers may not only be donors, potential donors, or volunteers. Readers might also include the media, watch dog groups, and state regulatory agencies. The public looks at the Form 990 as a key component for due diligence when they are considering a commitment of time and/or resources to an organization. The public wants to understand the tax-exempt’s financial health, strength of its governance, and ability to carry out its mission and program activities.
- Involve all departments of your organization to gather and review pertinent information – department heads, marketing, Executive Director, and possibly in-house counsel.
- Plan the type and extent of information that would be important to your readers – decide what is too much information and what is not enough. Some examples of narratives to review for content of information may be…
- Business and family relationships
- Termination and Dissolution of Assets
- Abnormal activity or any potential non-compliance
- Formatting – keep in mind that you will lose the formatting on Schedule O when the IRS provides the return to Guidestar. You may want to provide your return directly to Guidestar if formatting is important to understanding your return.
What not to include:
There is also some information that you should never disclose on Schedule O…
- Do not add supplemental information about a related schedule, they should be reported on the supplemental information section of those schedules
- Do not report private information such as social security numbers
Schedule O is a chance for tax-exempt organizations to shine, don’t miss the opportunity to tell your readers about your great organization.
About the Author
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.