What Every Non-Profit Board Member Needs to Know About Form 990

If you serve on a non-profit board, one document says more about your organization than almost any other: Form 990. Donors, funders, journalists and watchdog groups all read it. This guide explains what the 990 is, who files which version, what it asks about your board, and how to review it properly.

What is Form 990?

Form 990 (Return of Organization Exempt From Income Tax) is the annual information return that tax-exempt organizations file with the IRS. It reports what the organization did, how it was funded, how it spent its money, who runs it, and how it is governed.

It is an information return filing that is not optional. It is the main way the IRS, state regulators and the public check that a tax-exempt organization is behaving like one.

Which version does your organization file?

"Form 990" is a family of forms. Choosing the correct one depends on gross receipts (all money received from all sources, before subtracting costs) and total assets.

Form	Who files it
990-N (e-Postcard)	A short online notice, not a full return for organizations whose gross receipts are normally $50,000 or less. This is an average over three years for an organization that is at least three years old.
990-EZ	Organizations with gross receipts under $200,000 and total assets under $500,000 at year end. These organizations may file the full 990 instead.
990	Organizations with gross receipts of $200,000 or more, or total assets of $500,000 or more.
990-PF	All private foundations, regardless of size.
990-T	Any exempt organization with $1,000 or more in gross income from an unrelated business. Filed in addition to the 990 series return, and can carry tax.

When is it due, and does it have to be filed electronically?

The 990-series return is due on the 15th day of the fifth month after the end of the organization's tax year. For a calendar-year organization, that is May 15.

A six-month extension is available by filing Form 8868, which moves a calendar-year deadline to November 15.
Forms 990, 990-EZ, 990-PF and 990-T must all be filed electronically. The 990-N is submitted online.

What Form 990 contains

The full Form 990 is long, but a board member should know the main parts:

Part I and Part III: a summary of the organization and a description of its mission and accomplishments.
Part VI: governance, management and disclosure. This is the section relating to the board, and we cover it below.
Part VII: compensation of officers, directors, key employees and the highest-paid employees above certain thresholds.
Parts VIII to X: revenue, expenses (split into program, management and general, and fundraising) and the balance sheet.
Schedules: supporting detail, including Schedule A (public charity status), Schedule B (major contributors), Schedule L (transactions with insiders) and Schedule O (explanations, including how the board reviewed the return).

What the 990 asks about your board (Part VI)

Part VI is a series of mostly yes/no questions about how the board operates. These are the ones directors should know:

Independence. How many voting board members there are, and how many are independent.
Board review of the 990. Did the organization give a complete copy of the 990 to all members of the governing body before filing? If there was any review process, Schedule O must describe it. If there was none, the organization must say so.
Conflict of interest. Is there a written policy, are directors required to disclose possible conflicts each year, and does the organization regularly monitor and enforce the policy?
Whistleblower and document retention policies. Neither is legally required by the IRS, but answering "no" signals a governance gap to anyone reading the return.
Executive compensation. Was the pay of the top executive reviewed and approved by independent people using comparability data, and was the decision documented?
Public disclosure. How the organization makes its governing documents, conflict of interest policy and financial statements available.

One technical note: the IRS does not require a board to review the 990 before filing, but it does require the organization to answer the question. Whatever the organization says, the board will answer for it. Part VI also applies to full Form 990 filers only, since the 990-EZ has no governance section.

The 990 is public

A 990 is, for the most part, a public document. A nonprofit must make its three most recent annual returns available for inspection. An in-person request at the organization's office must generally be met the same day, and a written request within 30 days.

One important exception: names and addresses of donors on Schedule B can be redacted from the public copy, except for private foundations. Be careful here. The amounts and the descriptions of any non-cash gifts remain visible, and a public copy that accidentally includes donor names is a real risk. Keep a prepared public-disclosure copy on file, rather than redacting under time pressure.

Because everything else in the return is public, treat each answer as something a donor or reporter may read.

What happens if the 990 is late or missed?

Daily penalties. For a late or missing return without reasonable cause, the IRS charges a daily penalty up to a cap. The amount of the penalty is determined by the size of the organization.These amounts are adjusted annually for inflation, so check the current figures on IRS.gov.
Penalties on individuals. If the IRS makes a written demand and the return still is not filed, the people responsible, which can include officers and directors, can be penalized personally.
Automatic loss of exemption. An organization that fails to file for three consecutive years automatically loses its tax-exempt status, effective on the due date of the third missed return. This applies to the 990-N too, even though a late e-Postcard carries no daily penalty.

Reinstating exemption is slow and costly. A missed filing is one of the most avoidable ways to lose it.

How a board should review the 990

Aim to give directors the complete draft, schedules included, at least two weeks before the filing deadline. Then check:

The mission and program descriptions. Do they match what the organization actually does and says elsewhere?
The numbers against the financial statements. Do revenue, expenses and net assets agree with the books or the audit?
The spending split. Look at program, management and general, and fundraising expenses as a share of the total, and compare them with last year. Ask about large swings.
Compensation. Check that Part VII is accurate and that pay decisions were reviewed as the return says.
Insider transactions. Make sure Schedule L is complete. A return that says the board monitors conflicts of interest while omitting a known insider transaction is a serious problem.
The governance answers. For each yes in Part VI, ask: can we show it? A policy that exists on paper but is never signed, reviewed or enforced is not a yes.
What is missing. Is there an unrelated business that needs a 990-T? Are state filings, which often require a copy of the 990, on the calendar?

A simple annual calendar

For a calendar-year organization:

January: gather payroll and contractor records, and donor acknowledgments.
February to March: close the books and finalize financial statements.
April: the preparer completes a draft. Circulate it to the full board.
Late April to early May: directors ask questions, the board records its review in the minutes, and an officer signs.
By May 15: file, or file Form 8868 for an extension to November 15.
After filing: save the filed return and a redacted public-disclosure copy where directors and staff can find them.

Common mistakes

Treating the 990 as the treasurer's or accountant's job alone.
Sending the draft to the board days before filing, or without its schedules.
Answering policy questions without the paperwork to back it up.
Filing the wrong version because gross receipts changed.
Forgetting the Form 990-T for unrelated business income.
Missing state filings that depend on the federal return.
Releasing an unredacted Schedule B.

Keeping the evidence in one place

The 990 asks whether the board reviewed the return, how it reviewed it, and whether its policies are real. Evidence of what the board saw and when is easier to produce if the draft return, the board's comments, the minutes recording its review and the filed copies all live in one place. A board portal such as BoardCloud can hold these documents together, so directors can find them and the board can show what it reviewed and approved.

Frequently asked questions

Is Form 990 a tax return?
It is an information return. Most 501(c)(3) organizations owe no tax when they file it. Tax on unrelated business income is reported separately on Form 990-T.

Do board members have to approve the 990?
Federal law does not require board approval or even review before filing. But Part VI asks whether the return was provided to the board and how it was reviewed, so the organization has to answer either way. Reviewing and recording it in the minutes is the sound practice.

Is the Form 990 public?
Yes, with the exception of donor names and addresses on Schedule B for most public charities.

What if we miss the deadline?
File as soon as possible. The IRS can waive penalties where there is reasonable cause, but the three-year rule that revokes exemption has no such flexibility.

Some organizations, such as churches and certain governmental entities, are not required to file at all.