As a practitioner with 11 years' experience working with non-profit clients, I get a lot of comments from executive directors and boards of directors about the IRS Form 990 that's required filing each year by most organizations exempt from income tax under IRS code. The concerns cover the complexity of the form and the amount and detail of information required in preparing the return. The non-profits I know work on bare bones budgets and have nothing to hide from public inspection. They are, however, overwhelmed by the actual Form 990 and wonder if there's an easier way to report their activities. Unfortunately, with the newly released 990 taking effect for returns filed in 2009, both non-profits (management and board) and their preparers will be required to provide greater breadth and depth of information related to the non-profit's operations and should start learning and understanding the new form now.

Several issues were raised during the redesign process and public comment period that drove the development of the final product. First was minimizing the reporting burden. CPAs know that many of our non-profit clients have executive directors who aren't financially astute and that's ok, as most of them have been trained in social services, not finance. The new 990 succeeds in its original goal: to reduce the burden in its preparation. This reduction is done through use of thresholds, reporting by type rather than transaction, and eliminating unnecessary attachments and schedules.

Second, reviewers wanted the non-profits to be able to qualitatively tell their story, rather than just report financial information. As the 990 is a public document available to potential donors, non-profits want to be able to fully describe their mission and activities to convince potential donors of their charitable purpose. Previously, the only area that an organization could really describe its mission and activities appeared on page 3 (Statement of Program Service Accomplishments) and even then it was more a tool to report grants and expenses. The revised form enables filers to provide a summary page in the beginning and various places throughout the return to provide narratives.

Finally, given the current economic climate, the new 990 has a section on governance, consisting of three parts: composition of the governing body (board of directors and management), management policies, and disclosure. An important fact to consider is that the IRS does disclose in the instructions that certain information that it's asking for isn't required disclosure under federal law. The instructions state the organization should consider its own facts and circumstances in disclosing this information. Thus presenting a balancing act for clients and CPAs who advise them, as the lack of disclosure may not be unlawful, but given that it's a public document, potential donors may see the lack of disclosure as a red flag and withhold contributions. For example, you're not legally required to have a written conflict of interest policy and answering “no” is perfectly legal. However, potential As a practitioner with 11 years' experience working with non-profit clients, I get a lot of comments from executive directors and boards of directors about the IRS Form 990 that's required filing each year by most organizations exempt from income tax under IRS code. The concerns cover the complexity of the form and the amount and detail of information required in preparing the return. The non-profits I know work on bare bones budgets and have nothing to hide from public inspection. They are, however, overwhelmed by the actual Form 990 and wonder if there's an easier way to report their activities. Unfortunately, with the newly released 990 taking effect for returns filed in 2009, both non-profits (management and board) and their preparers will be required to provide greater breadth and depth of information related to the nonprofit 's operations and should start learning and understanding the new form now.

Several issues were raised during the redesign process and public comment period that drove the development of the final product. First was minimizing the reporting burden. CPAs know that many of our non-profit clients have executive directors who aren't financially astute and that's ok, as most of them have been trained in social services, not finance. The new 990 succeeds in its original goal: to reduce the burden in its preparation. This reduction is done through use of thresholds, reporting by type rather than transaction, and eliminating unnecessary attachments and schedules.

Second, reviewers wanted the nonprofits to be able to qualitatively tell their story, rather than just report financial information. As the 990 is a public document available to potential donors, non-profits want to be able to fully describe their mission and activities to convince potential donors of their charitable purpose. Previously, the only area that an organization could really describe its mission and activities appeared on page 3 (Statement of Program Service Accomplishments) and even then it was more a tool to report grants and expenses. The revised form enables filers to provide a summary page in the beginning and various places throughout the return to provide narratives.

Finally, given the current economic climate, the new 990 has a section on governance, consisting of three parts: composition of the governing body (board of directors and management), management policies, and disclosure. An important fact to consider is that the IRS does disclose in the instructions that certain information that it's asking for isn't required disclosure under federal law. The instructions state the organization should consider its own facts and circumstances in disclosing this information. Thus presenting a balancing act for clients and CPAs who advise them, as the lack of disclosure may not be unlawful, but given that it's a public document, potential donors may see the lack of disclosure as a red flag and withhold contributions.