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Six Important Tips For Your IRS Form 990

Did you realize that your nonprofit’s IRS Form 990 is available to the general public?  This is a big surprise for many nonprofit board members.  Armed with this knowledge, a nonprofit misses a terrific opportunity to tell their story as fully as possible if they are not thinking strategically about how information is presented in this important document.  For advice on what you can be doing to take advantage of this communications opportunity, as well as your IRS Form 990 generally, we turned to regular BoardAssist guest blogger and finance pro Paul Konigstein.  As usual, Paul had all the answers!

Six Important Tips For Your IRS Form 990

If you think only the Internal Revenue Service reads your Form 990, prepare for a rude awakening. Everyone is reading your 990 including foundation program officers, corporate giving officers, major donors, job applicants, the media, and regulators. In fact, anyone at all can download your 990 from Guidestar. With so much scrutiny, presenting your organization in the most accurate and favorable light on the 990 is critical. Here are six sections to check to make sure your 990 is all it can be.

Program Service Accomplishments – This is your opportunity to tell your story in your own words. Use language from fundraising solicitations, grant proposals, or the annual report. Or, work with your development, marketing, or public relations staff or advisors to create a fresh view of the organization’s accomplishments. Be sure to update the accomplishments every year and provide reach and outcome data.

Computation of Public Support Percentage – This section tells the world whether your nonprofit is a public charity or a private foundation. Donors want to know because contributions to public charities are tax deductible whereas contributions to private foundations are not. Make sure the percentages on lines 14 and 15 are at least 33 1/3%. If not, immediately talk to a nonprofit tax expert about how to ensure your public charity status.

Lobbying – The IRS defines lobbying as attempts to influence public opinion (grass roots lobbying) or attempts to influence legislation (direct lobbying). If your organization does either, make sure Schedule C is completed. Unless lobbying is part of your mission, the amount expended on lobbying should be less than 5% of total expenditures. If not, you may have to pay a penalty.

Activities Outside the US – Since 9/11, foreign activities have been under intense US government scrutiny as part of its effort to combat terrorism. If you give grants or scholarships to individuals or organizations outside the US, make sure to list and describe each one. You must also disclose any foreign bank accounts or trusts and any foreign chapters, partners, parent organizations or other related entities.

Unrelated Business Income Tax – Do you have revenue from space rental, parking fees, merchandise sales, concessions, or advertising? If so, you may be subject to unrelated business income tax if the activity is not mission related. Make sure you understand why each type of revenue is classified as either mission related or unrelated on page 9. If there is any amount in the unrelated column (Column C), make sure Schedule T is completed. If you do have unrelated revenue, don’t panic. You will pay the tax only if the activity is profitable.

Professional Fundraising Services – Did you pay any outside fundraisers more than $5,000? An outside fundraiser is any fundraiser who is not an employee and most commonly includes grant writers, gala managers, capital campaign consultants, planned giving consultants, and prospect researchers. The IRS and the public want to know how much of the money raised your charity gets to keep. List each consultant and their fee to facilitate this evaluation.


Program Service Accomplishments – Page 2, Item 4

Computation of Public Support Percentage – Schedule A, Page 2, Items 14-18

Lobbying – Schedule C

Activities Outside the US – Schedule F

Unrelated Businsess Income Tax – Page 9 and, if applicable, Schedule T

Professional Fundraising Services – Schedule G, Page 1, Item 2


Paul Konigstein is a Senior Consultant at Accounting Management Solutions, helping nonprofits improve their finance, accounting, and governance. Paul is equally comfortable as an interim Chief Financial Officer or as an adviser for a specific project. Before joining AMS, Paul spent over twenty years as a nonprofit financial executive with arts and culture, education, and international development organizations including Helen Keller International, the New York Hall of Science, and the Metropolitan Opera. Outside the office, Paul is the former Board Treasurer for The Animation Project, which transforms the lives of at risk youth using digital art technology as a therapeutic medium and a workforce development tool. BoardAssist brought Paul and The Animation Project together.