990s are Public Records

990s are Public Records

February 24, 2025

The main goal of every nonprofit is to provide a service for the greater good - a mission and/or a cause for which the government has granted the organization a tax-exempt status for their activities. Nonprofits work to tackle complex issues across industries, geographic boundaries, and political views. They require a village of stakeholders including, but not limited to employees, governing body, members, volunteers, beneficiaries, donors, other nonprofits, and the broader community. Effectively maintaining stakeholder relationships is a vital part to overall success and requires regular reporting about organizational health and impact.

Nonprofits may use multiple methods to provide information to stakeholders and funders, such as annual reports, audited financial statements, grant reports and their annual 990 informational tax return. Most tax-exempt organizations are legally required to file an annual informational tax return with the IRS to maintain their tax-exempt status and must make the filed return publicly available for a period of at least 3 years. Maintaining compliance with IRS regulations has made the 990 tax return a standardized tool that many nonprofits use as a primary, and sometimes sole, source of reporting to stakeholders.

Annual informational tax returns in the 990 series are effective reporting tools in several ways:

• Transparency: They provide detailed information about a nonprofit's finances, including revenue, expenses, and executive compensation. This transparency helps build trust.

• Accountability: The form includes information on governance practices and program activities, ensuring that nonprofits are held accountable for their operations and use of funds.

• Benchmarking: Nonprofits can use Form 990 data to compare their performance with similar organizations, helping them identify areas for improvement and growth.

It is noteworthy that there are several types of 990 forms that organizations file depending on their tax-exempt classification and level of income (ex. 990-EZ, 990-PF, etc.) Also, there are more than a dozen different schedules that may be required to be attached to the 990 providing supplemental information about various areas of tax-exempt entity compliance. For example, Schedule C provides information about Political Campaign and Lobbying Activities, and Schedule B reports more detailed information about donors above certain thresholds including their name, address, and amount contributed. The IRS public disclosure requirements allow organizations, other than private foundations, to provide a Public Inspection Copy of their filed tax return with donor personal information left blank.

Stakeholders can find public 990 tax return information through several resources:

• IRS Website: The IRS provides a Tax-Exempt Organization Search Tool where you can look up an organization's tax-exempt status and filings, including Form 990.

• Independent organization data collection:
  • ProPublica's Nonprofit Explorer: This tool allows you to browse millions of annual returns filed by tax-exempt organizations. You can search for specific organizations and see details provided on their return like executive compensation, revenue, and expenses.
  • Candid’s GuideStar: This tool allows you to browse nonprofit profiles including annual returns filed. The platform requires a Nonprofit organization to create a profile, and individuals can search information after registering with Candid. Candid has a Transparency rating system based on how much information is provided by the organization.
    
    
• Direct Requests: You can request copies directly from the organization or submit Form 4506-A to the IRS to request public inspection or copies of exempt organization returns.

The form 990 is often part of a Nonprofit’s broader reporting strategy but is not optional for many organizations due to IRS reporting requirements. When done right, a 990 can be a powerful storytelling tool that anyone from the public can find and reference. Nonprofit leaders are often juggling many responsibilities and an annual tax filing with its various schedules can seem overwhelming. Make sure to consult with a trusted tax professional about how you can maximize the use of your organization’s 990 to accurately and comprehensively highlight your impact each year.  Larson and Company has developed a suite of services specifically to serve the needs of nonprofit organizations.