The onset of autumn brings cooler temperatures and changing colors, but also marks the season of annual reporting by most non-profit organizations with fiscal years ending June 30th. Annual reports, financial audits, reviews, and compilations, and Forms 990 are often brought before boards and finance committees during these times, and they are called upon to both review and approve these critical reports. While financial statements are somewhat familiar, given that these are generally reviewed throughout the year, the Form 990 is only presented annually, making accurate review by boards and committees more challenging.
There are many reasons why your entire board of directors should review your organization’s draft IRS Form 990 before it is filed. Of course, the most important reason is to ensure its accuracy. While not asking board and committee members to recall each precise financial detail of the last year, a review of the 990 begins with a look for the “story” in the numbers. Based on the periodic financial reporting provided throughout the year, members have sense of the financial direction of the organization and can review the 990 to make sure that it reflects that direction. Discrepancies can be noted, such as category items reporting zero, when this is not the case. Further, when prepared by an outside firm focused on the accounting and financial aspects of the form, some data, such as addresses or board member names, may be outdated and in need of correction or updating. Even misspellings can signal lack of attention to detail and can erode trust in the nonprofit.
Another reason for the full board to review the Form before it’s filed with the IRS is to help ensure that the nonprofit’s story will emerge clearly for others accessing and reading the 990 once it is filed. For instance, when reviewing the ministry 990, a board member may immediately look at the numbers on the first page showing revenue, expenses, contributions, assets, and liabilities. Someone else may flip first to Section III to read about how the ministry accomplishes its mission, and another may be curious about what the form reveals about board members. If each board and committee member of the ministry, takes the time to review the 990 with fresh eyes, each is likely to see different things emerge from the form – just as reporters, potential donors, and even regulators, who may review the form in the future – will also look for different things. A review by multiple eyes who are familiar with the nonprofit’s activities will help this document tell your ministry’s best story every minute of every day.
Below are some helpful links to assist in the review of the ministry’s 990, from the basics of the form, to advice on how to review the 990 from the eyes of all of its intended audiences.
- Basic Highlights of the Form 990 – Commentary and webinar that break down each part of the 990 and address FAQs. From GuideStar.
- How to Read the 990 – A comprehensive, 10-chapter guide from the Nonprofit Coordinating Committee of New York.
- Reporting Compensation on the 990 – Videos from both the IRS and GuideStar addressing common mistakes made on this often-scrutinized portion of the Form 990.
- 990 Red Flags – Webinar discussing common pitfalls when preparing the 990 from Nonprofit Quarterly.
- How Others Read the 990 – An article from the Journal of Accountancy that provides guidance on how to review the 990 through the eyes of various audiences.
Please share this with your finance committee members and board of directors. If you have any questions, please feel free to reach out to a member of the Felician Services Finance Team:
Janet McGuirk
Maria Parrillo
Jeremy Westrick
[1] Modified from the National Council of Nonprofits: https://www.councilofnonprofits.org/print/1907
The United States Conference of Catholic Bishops (USCCB) and Pope Francis have raised their voices in defense of the hostility being projected towards immigrants and refugees throughout our world and in the United States. Our Catholic leaders continue to advocate for legislation and policies that honor human rights and the dignity of persons. As Felician-Sponsored ministries, we stand in solidarity with the poor and oppressed and honor the dignity of persons while we continue to extend our ministerial services to all people no matter their race, religion, ethnicity, nationality, or immigration status.
The U.S. Citizenship and Immigration Services, (USCIS) has released a revised version of Form I-9, Employment Eligibility Verification. Employers may begin using the new form immediately. As of September 18, 2017, employers may only use the new form, which has a revision date of 07-17-2017. After September 18th, no other versions of the I-9 will be acceptable for use. The new form replaces the previous form, which was revised on 11/14/2016.