Increased Transparency Goal for the Redesigned IRS Form 990

Tax-exempt organizations with years ending December 31, 2008 and larger organizations will begin the filing of the revamped IRS Form 990. The revised form is aimed at “enhancing transparency, promoting tax compliance and minimizing the burden on the filing organization,” according to the IRS website.

The form applies to all organizations with tax exempt status from hospitals to colleges to private charities. A core section of the Form 990 consists of 11 pages where the organization “tells it’s story.” Several schedules follow the core form based on assets and organization structure.

One major change to the core form is that the organization is given the opportunity to describe accomplishments and mission up front. It also allows activities to be explained throughout the document. The core form is what most of the public is able to access on tax-exempt organizations.

Other changes were made to the form’s summary page, governance section and the various schedules. Worth noting is the change to the governance section. IRS Form 990 requires transparency of the information on the governing body of each organization, policies and practices of this governing body and an explanation of how it will make financial and governance information available to the public.

Many other transparency-driven changes were made to the document including information on executive compensation, related organizations, foreign activities, hospitals, non-cash contributions and tax exempt bonds.

This new form may seem daunting, but a goal of the form is to reduce the burden on the filing organization. We’ll see as it is integrated.

The transparency-driven changes are a good thing for the sector as it gives recipients and donors to our organizations a real view of how we operate. This inside view is designed to build trust in our missions, not take it away.