How Nonprofit Boards Ensure Compliance and Accuracy
Filing Form 990 is one of any nonprofit organization’s most critical compliance tasks. This form provides the IRS, donors, and the public with crucial information about your nonprofit’s finances, governance, and activities. While the day-to-day management of financial records may fall to staff or external professionals, the board of directors plays an essential role in ensuring the accuracy and completeness of Form 990. A proactive, informed board can help avoid costly mistakes and uphold the organization’s transparency and compliance.
In this post, we’ll dive into the board’s role in ensuring a flawless Form 990 and offer actionable tips on how to make the filing process smoother.
Why Is Form 990 So Important?
Form 990 serves multiple purposes:
- IRS Compliance: This is a required annual report that allows the IRS to assess a nonprofit’s operations and ensure it complies with the rules for maintaining tax-exempt status.
- Transparency: It provides valuable information for donors, funders, and other stakeholders, showcasing the nonprofit’s financial health, governance practices, and accomplishments.
- Public Accountability: Since Form 990 is publicly accessible, nonprofits that file incomplete or incorrect forms can face reputational damage, which may affect donor trust and grant opportunities.
These purposes make it essential for nonprofit boards to actively participate in the process to ensure the accuracy and timeliness of the filing.