New IRS Form 990

The Star Tribune recently published an article discussing the new IRS 990 Form for nonprofits. We thought it was interesting and wanted to pass it along. Here is a teaser and a link to the full article:

New forms help people check out charities
The new IRS Form 990 means more disclosures from nonprofits and more information available to their potential donors.

By JEAN HOPFENSPERGER, Star Tribune

For the first time in 30 years, the Internal Revenue Services has revamped the tax forms that charities must file, requiring tough new reporting on everything from executive salaries to fundraising costs to whistleblower policies.

Read more

Addressing Nonprofit Executive Compensation

What could be worse than seeing a headline announcing the names of overpaid nonprofit executives with your organization’s name among the list?

The best way to avoid this (or address this if it should happen) is to have clearly defined processes in place as you determine executive compensation. The data from the process could be helpful in addressing the situation and is also helpful as you complete the 990 Form.

A suggested process is to benchmark your chief executive’s compensation against survey data for comparable organizations. The information is available from multiple resources such as: the Minnesota Council on Nonprofits survey, GuideStar and the Chronicle of Philanthropy. There may be other resources or procedures that are used in determining appropriate levels of compensation for your staff as well. Feel free to share your processes and/or resources by responding to this post.

Kathy Grochow, NRS, St. Cloud

The Impact of Form 990

With substantial changes to Form 990, the IRS is taking a strong position related to good board governance and want to know what policies are in place as well as the processes for reviewing these policies. Good governance includes an engaged, informed, and independent board; defined policies and practices; and transparency.

The impact that the increased transparency will have on nonprofit organizations has been severely underestimated. It is not sufficient for nonprofit staff and board members simply to be made aware of these changes. They must also be alert to the changes' strategic implications and have tools to manage them successfully. The key to strategic use of the new reporting requirements lies in nonprofit organizations' governance practices.

Bremer and the Center for Nonprofit Excellence & Social Innovation (CNESI) have teamed up to provide a series of Board Governance training sessions in 2010 with the first session scheduled for January 14th (11:30-12:30 pm. or 5– 6 p.m.) located at the Bremer Bank, downtown St. Cloud location. With registration of at least four sessions, your organization is eligible for up to three hours complimentary consulting from CNESI. For more information or a brochure, contact Kathy Grochow at kdgrochow@bremer.com.

Good Question

I recently came across this good question and thought it might be helpful to share with our readers.

Q: If someone asks for a copy of our organizations Form 990, do we need to disclose our contributors?

A: The rules differ for public charities and private foundations. Public charities are not obligated to reveal information about contributors. The law permits public charities to omit the names and addresses of contributors in Schedule B, as well as any identifying information. Private Foundations, however, are required to reveal information about contributors. They can not omit contributor names and addresses.

Source: Advocacy Digest - August 21, 2009

Posted by Kathy Grochow, NRS, St. Cloud