It’s been 4 years since the IRS redesigned the 990 Form. Part of the change was the addition of a list of questions on various policies your organization may have adopted. Since that time, the IRS has conducted a study to determine which policies organizations have and how the existence of those policies correlates to both good governance and IRS compliance. The study found that those organizations that have polices – and follow them – generally have better tax compliance and governance.
Form 990 Policy Questions
The IRS asks about the following policies on the 990 form:
- Did the organization have local chapters, branches, or affiliates?
- If “Yes,” did the organization have written policies and procedures governing the activities of such chapters, affiliates, and branches to ensure their operations are consistent with the organization’s exempt purposes?
- Has the organization provided a complete copy of this Form 990 to all members of its governing body before filing the form?
- Describe in Schedule O the process, if any, used by the organization to review this Form 990.
- Did the organization have a written conflict of interest policy?
- Were officers, directors, or trustees, and key employees required to disclose annually interests that could give rise to conflicts?
- Did the organization regularly and consistently monitor and enforce compliance with the policy?
- Did the organization have a written whistleblower policy?
- Did the organization have a written document retention and destruction policy?
- Did the process for determining compensation of the following persons include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?
- The organization’s CEO, Executive Director, or top management official
- Other officers or key employees of the organization
- Did the organization invest in, contribute assets to, or participate in a joint venture or similar arrangement with a taxable entity during the year?
- If “Yes,” did the organization follow a written policy or procedure requiring the organization to evaluate its participation in joint venture arrangements under applicable federal tax law, and take steps to safeguard the organization’s exempt status with respect to such arrangements?
Form 990 Policy Implications
What does this mean for your organization? Whether or not you have the policies doesn’t affect your chances of being audited, but it does reflect how your organization is operated. This is especially important if you, like many organizations, use your 990 as a marketing tool and for grant requests. Donors have access to your 990 through websites like Guidestar.org, and use such sites to determine which organizations to support.
Ohio Non-Profit Governance Help
If you don’t have the seven recommended policies, you should consider adopting them by December 31, 2012. Especially important are the polices on conflicts of interest, 990 review processes and compensation. Rea and Associates has sample 990 policies on our website. Your Rea advisor can also help you get started. It’s not too late to get your policies in place. Not sure how to implement these policies? Contact Rea & Associates. Our Ohio Not-for-profit services team will help you write and implement the appropriate policies.