Monday, April 3, 2017

Metric Mondays #13: Form 990 Distributed to Governing Body before Filing with IRS


Welcome back to Metric Mondays! This week, we're looking at an important measure of Accountability & Transparency: distributing the Form 990 to the organization’s governing body in advance of it being filed with the Internal Revenue Service (IRS).

The Form 990 is the informational tax return that most 501 (c) 3 organizations are required to file annually with the IRS. The Form is also the main basis for our star rating evaluations.  Because the 990 is a federal tax form and it used by third parties (Charity Navigator, donors, and others) it is important that the document is accurate. In fact, the Form 990 is signed by an officer of each organization and under penalties of perjury declaring that the document is “true, correct and complete.” Who better to review the document before it is officially filed with the IRS than those who know the organization the best, it’s board of directors. The board should also review the form so that they are completely aware of the status of the organization when it comes to all of the information that is contained in the 990. 

Considering the 990 is a public document it is best that the board has reviewed and confirmed that it is providing an accurate picture of the organization to third parties. That group includes donors to the organization. The 990 information could be the difference of a donor supporting or not supporting an organization.   

The Charity Navigator rating methodology has our analyst team check to see if organizations are following this best practice by marking "Yes" to question 11a, part VI, Section B of the 990. That question reads “Has the organization provided a complete copy of this Form 990 to all members of its governing before filing the form."

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