The Redesigned Form 990:
What Does it Mean for Smaller Nonprofits?
In 2008 the IRS made extensive changes to the organization and information required for the Form 990 for nonprofits.
“When we released the redesigned draft form this past June, we said we needed a Form 990 that reflects the way this growing sector operates in the 21st century,” said Steven T. Miller, Commissioner of the IRS’ Tax Exempt and Government Entities division. “The public comments we received in response to our draft form helped us develop a final form consistent with our guiding principles of transparency, compliance and burden minimization.”
Although one of the goals was to reduce the burden of completing the form, many organizations will find the transition difficult. There is an increased emphasis on governance and policies and procedures. Although in an ideal world these would already be in place, smaller organizations (especially those with volunteer boards and few or no paid staff) may not have even thought about some of them. In addition, new reporting requirements designed to increase transparency may require re-thinking how bookkeeping is done, staff time is tracked and allocated and compensation is determined, what meeting minutes should be kept, and how much knowledge or training the Board needs to provide fiscal oversight or address governance issues.