Concerned about risk? Click to take a free, 5-minute risk assessment.
  • Blog
  • Contact
The Culture Insurance Group
  • WHO WE ARE
  • WHAT WE DO
  • WHY WE DO IT
  • Home
  • Who We Are
  • What We Do
    • Employee Benefits
    • Risk Management
    • Business Insurance
  • Why We Do It
  • Blog
  • Contact

Blog

Categories

All
Business Insurance
Company Culture
Employee Benefits
Group Insurance
Health Insurance
Human Resources
Risk Management

Archives

May 2023
February 2019
January 2019
December 2018
November 2018
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
April 2018
February 2018
January 2018

Overwhelmed By Reviewing Form 990? Where To Focus Your Review And What To Look For

5/4/2018

Comments

 
Overwhelmed By Reviewing Form 990? Where To Focus Your Review And What To Look For
This is a guest post by Amanda Duff, Campus Recruiter for Lindsay & Brownell, LPP

Nonprofit organizations are stewards of public funds. This behooves officers and board members to be informed and educated regarding the rules for utilizing those funds, to maintain appropriate records, and to report to government agencies to demonstrate compliance.
Not everyone is an accountant, nor is it efficient for everyone to review the transactions that make up the numbers reported on the returns in detail. If the financials were subjected to an audit, you can reasonably rely on the auditing accounting firm and the audit committee regarding the actual numbers reported; however, there are several areas that require attention so that the tax return can fulfill two of its primary purposes – compliance and marketing.

Compliance
The Form 990 is a tool for the IRS and Attorney General to facilitate compliance for tax exempt organizations. The form is set up to help non-profit organizations stay compliant or helps organizations identify areas where they may have compliance issues.

Checklist of Schedules
The third page of Form 990 (Part IV) is a checklist of required schedules. This list is a helpful tool to alert you to areas where issues could arise or where further disclosure may be required. If you read anything on the tax return pertaining to compliance, you will want to read through the questions in Parts IV, V and VI.

This could provide some insight regarding the most common oversights or pitfalls, which include reporting transactions with related parties or failing to file a required form or schedule.

Tell your Story – Form 990 as a Donor Marketing Tool
When a sophisticated donor is considering a contribution to your organization, the Form 990 is one document that they will likely be evaluating when making their decision. If you were a potential donor and looked at the tax return alone, would you be motivated to donate to the organization? When deciding this, what are you looking at? Hint: It’s not all in the numbers.

Page 1 - Summary
This page is a quick snapshot of the organization. It provides a concise mission statement and a summary of financial activities and overall financial health. Are the financial activities and net assets positive? Are the net assets declining?

Part III - Program Service Accomplishments
This section should be read word for word. You should question if this section highlights all of the great work that was done during the year.
  • Are there measurable outcomes that can be showcased?
  • Is everything described consistent with what you know about the organization and consistent with what’s on the website?
  • Are all of the programs described consistent with the organization’s charitable purpose (this was reported with the original application for exempt status)?
  • Is it too wordy and preventing a potential donor from getting to all of the “good stuff”?
Part VI, Section B - Policies
This section lists several best practice policies that are not IRS required policies, but may alert a donor to red flag areas.
  • Can the organization say yes to all of the questions asking if certain policies are in place?
  • Are these policies communicated and enforced, or is this the first you have heard about them?
What’s in the numbers?
If you want to drill in on what makes up the summary information reported on page 1, you can get a good idea about the bottom line.

Public charities are required to be publicly funded. The Public Support Test is shown on Schedule A and is an indicator of an organization’s viability as an organization supported by a broad base of funding sources. To qualify as a public charity, an organization must be at least 33% publicly funded.

Officer and director compensation is a hot topic for donors. The amounts reported are important, but equally important is a description of the compensation policy to give these numbers context.
Comments

WHO

An insurance company whose ultimate objective is to improve people's lives by focusing on collaboration and company culture.
Learn More

WHAT

Working to leverage your insurance needs in a way that improves company culture and protects you and your employees.
Learn More

WHY

We believe you're uniquely positioned to impact the lives of employees while increasing the profitability of your company.​
Learn More
© The Culture Insurance Group  |  Website Design by New York Ave.