Guides
How to read a Form 990 in fifteen minutes
The annual return of a US nonprofit is public. Four parts of it answer most of the questions people actually have.
Form 990 is the annual information return most tax-exempt organisations in the United States must file, and it is a public document. It is long, and almost nobody needs all of it. Four sections answer the questions that typically prompt somebody to go looking.
Part I, the summary
The first page carries revenue, expenses, net assets at the start and end of the year, and headcount. Read it against the prior year, which is printed alongside. A large swing in either direction is the thing worth asking about, and it is visible before you have turned a page.
Part VII, who is paid what
This lists officers, directors, trustees, key employees and the highest compensated employees, with compensation. Two things to look at: whether board members are compensated, which is unusual for a small organisation and not improper but worth understanding, and whether compensation is concentrated in a way that looks odd beside total revenue.
Schedule L, transactions with insiders
Loans to or from officers, grants to interested persons, and business transactions with interested persons are reported here. This is where related-party dealing shows up. Its presence is not evidence of wrongdoing: organisations rent from board members and buy services from their firms for sound reasons. Its presence alongside no conflicts policy is a different matter, and the policy questions are answered in Part VI.
Part VI, governance
Part VI asks whether the organisation has a conflict of interest policy, a whistleblower policy, a document retention policy, and whether the board reviewed the 990 before filing. These are yes or no answers an organisation gives about itself. A run of no answers tells you about how the organisation is run, and it is quicker to read than the financial statements.
Where to find it
Filings are available from the Internal Revenue Service and are mirrored by several free public databases. Organisations must also supply recent returns on request. If a request for one is refused, that is itself informative.
What it will not tell you
A 990 is a self-reported annual snapshot filed months in arrears. It will not tell you whether a programme works, whether staff are well treated, or what is happening now. It is a starting point for questions, not a verdict.