As the board member of a not-for-profit organization, you have many responsibilities, one of which should include reviewing the organization’s Form 990. On the Form 990, the IRS specifically asks the not-for-profit organization if it provides a copy of the Form to its board members before filing the return, and to describe the process, if any, they use to review it. This indicates that the IRS feels it is good governance for boards to be involved in the Form 990 review. While your tax preparer is very knowledgeable about the actual form, they are not as involved in the daily operations of your organization as you are. It’s important that you review the form’s contents as well.
Reviewing Form 990 can be very overwhelming, considering the core form is 12 pages, and there are 11 additional schedules that may also be required. Following are several key pages and schedules of the Form 990 you’ll want to take a look at should you find yourself with the responsibility of serving a not-for-profit organization as a board member:
- Page 2: Review the organization’s mission statement. Make sure that the descriptions for Program Service Accomplishments are appropriate and updated each year for any new activities.
- Pages 3 and 4: Pay special attention as many of these items are not related to the financial statements.
- Page 6: This page should be reviewed in its entirety as it relates to governance and management. These are items that board members should be very familiar with. If any in Section B are answered negatively, the board should consider adopting these best practices.
- Pages 7 and 8: Review the list of board members for completeness and accuracy. Note that the top management and top financial official must be reported on Part VII regardless of their salary amounts, and board members that served at any time during the year should be listed.
- Page 10: Make sure total expenses in column A are comparable to financial statements. Look at the allocation between Program Service, Management and General, and Fundraising.
- Page 11: Balance Sheet – Ensure the numbers compare to financial statements you have seen.
- Schedule B: Review the list of donors to be sure all are included. This list must be provided to the IRS, but is not open for public inspection.
- Schedule J: Required for board members, officers, or key employees paid over $150,000. Review for accuracy keeping in mind that this is public information.
If you have questions on the Form, or your not-for-profit organization would like to learn more, contact your Schenck account director or Jill Boyle at jill.boyle@schencksc.com.
We invite all not-for-profit leaders and board members to join us for our upcoming “Purposeful Boards, Powerful Fundraising” workshop. Perfect for board-staff teams, this day-long training session will help you create a strong board and develop successful fundraising practices. Learn more and register at www.schencksc.com/purposefulboards2012.
Jill Boyle, CPA, is a supervisor and member of Schenck’s not-for-profit industry team. Her clients include private foundations, public charities, credit unions, professional organizations, real estate partnerships and individuals.