Form 990 Review for Nonprofit Boards: What to Check Before It's Filed

Your nonprofit's Form 990 is public. A donor weighing a gift, a journalist, a prospective board member, a funder doing due diligence: anyone can look it up for free, and many do before they ever contact you. For a lot of people it is the first, and most detailed, picture of your organization they will see.

In many small nonprofits the board has never read it. The treasurer or an outside accountant prepares it, an officer signs it, and the board hears that it was filed. That works until the return says something the board did not know.

This guide covers what the Form 990 is, how to see exactly what the public sees, and what the board should check before the return is filed. It is general information and not tax advice, so use your accountant for the specifics of your return.

What the Form 990 is

The Form 990 is the annual information return most tax-exempt organizations file with the IRS. It reports finances, programs, and governance. Which version you file depends on size:

• Form 990-N (e-Postcard) for very small organizations, generally those with gross receipts of $50,000 or less.
• Form 990-EZ for smaller organizations, generally gross receipts under $200,000 and total assets under $500,000.
• Full Form 990 for everyone larger.

Check the current IRS instructions for exact thresholds, since the IRS can change them. Churches and certain other organizations are exempt from filing, and private foundations file a different form.

The return is due on the 15th day of the fifth month after your fiscal year ends, which is May 15 for an organization on a calendar year. An automatic six-month extension is available by filing Form 8868 before the deadline. An organization that fails to file for three years in a row automatically loses its tax-exempt status, which is covered in the compliance basics guide.

See what the public sees

The fastest way to understand your own Form 990 is to look it up the way an outsider would. It takes about ten minutes.

1. Go to ProPublica's Nonprofit Explorer and search for your organization by name or EIN.
2. Open the most recent filing and read the PDF of the return, not just the summary page.
3. Skim the same organization's earlier years to see the trend.
4. Look at your profile on Candid, where many donors check, and your listing in the IRS Tax Exempt Organization Search to confirm your status is current.

Then ask the questions a stranger would. Does the description of your programs sound like you? Do the numbers match what you tell donors? Is anything in there you would be uncomfortable explaining? Note that donor names on Schedule B are not made public for 501(c)(3) organizations, but nearly everything else is.

What the board should read

You do not need to understand every line. These are the parts where a board member's attention actually changes outcomes.

Part I, the summary. Revenue, expenses, assets, and headcount at a glance. Do these match the financial statements the board saw this year? Large differences need an explanation.

Part III, program service accomplishments. This is where the return describes your mission and what you did. It is your public pitch, and it should be accurate and consistent with what you tell funders. If the board has never read it, this is where a surprise is most likely.

Part VI, governance. This section is the one most relevant to the board, and it is where mistakes cost credibility. It asks, among other things:

• How many voting members the board has, and how many are independent
• Whether a written conflict of interest policy exists, and whether it is monitored
• Whether there is a written whistleblower policy
• Whether there is a written document retention and destruction policy
• How compensation of the top executive and other officers is determined
• Whether a copy of the Form 990 was provided to all board members before it was filed

Each answer should be true. If the return says you have a whistleblower policy, the board should have adopted one. The form uses a specific IRS definition of "independent," so read the instructions before counting. Our guide to the conflict of interest policy explains what a real one includes.

Part VII, compensation. Lists officers, directors, key employees, and the highest-paid employees with their pay. Confirm the figures are right and that the way executive pay is set matches what the board actually did. The board's process for that is described in what the IRS expects of 501(c)(3) boards.

Part VIII and Part IX, revenue and expenses. Part IX divides expenses into program services, management and general, and fundraising. Those percentages are what many donors look at first. Make sure the allocations are reasonable and that someone can explain them.

Schedule L, transactions with interested persons. If a board member, officer, or a relative or their business has done business with the organization or received a loan, it is reported here. Compare it against your conflict disclosures. A transaction missing from one but present in the other is exactly the kind of mismatch worth catching before filing.

A simple review process

Build this into the board calendar so it happens every year.

1. Ask for the draft early. Two to four weeks before the deadline, or before the extended deadline, is typical. The treasurer or accountant circulates it to the whole board.
2. Schedule a short walkthrough. Thirty minutes with the preparer, covering the sections above. Good questions are better than a thorough read.
3. Assign a few questions per reader. One person checks governance answers against reality, another checks compensation, another compares financials to the board's own records.
4. Resolve discrepancies before signing. Not afterward.
5. Record the review in the minutes. The return asks whether it was provided to the board, and your minutes should show that it was.

If the board finds an error after filing, talk to your accountant about filing an amended return. Correcting a mistake is always better than leaving it public.

Where boards fall short

The common pattern is a board that learns what the return says from an outsider. A donor mentions that the public filing lists a different executive salary than the one the board approved. A reporter asks why the organization claims to have a policy that nobody remembers adopting.

An illustration: the return says a written conflict of interest policy exists and is monitored. In reality there is an old template in a drawer and no one has signed a disclosure in years. Nobody was trying to mislead anyone; the person completing the form answered the way they assumed was true. The board read the question for the first time after it was filed.

The Form 990 does not just report on governance. It makes governance visible.

The practical takeaway

Ten minutes to look up your own filing, and one meeting a year to review the draft, is enough for a small board to stay ahead of this. It also strengthens the other work you are already doing, from financial oversight to the audit committee, because the 990 asks about all of it.

Put it on the annual calendar next to the meeting, the budget, and the conflict of interest disclosures. The annual meeting checklist is a good place to add it.

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Board Manager helps small nonprofits keep governance records, signed conflict of interest disclosures, and onboarding in one place, which makes answering the 990's governance questions simpler. Start for free.