Preparing the New Redefined Form 990 For Nonprofit Organizations
by
Book Cover & Preview Text
A. Overview of the nonprofit sector
A look at the astounding growth of the nonprofit sector in the United States and throughout the world will show why the changes in the IRS Form 990 are warranted. For example, in 1996 there were 1,084,939 organizations in the United States; ten years later the total number of organizations had grown to 1,478,194, an increase of 36.2 percent. More significant is the increase in the number of public charities. In 1996 there were 535,930 501(c)(3) public charities, and by 2006 there were 904,313 or a 68.7 percent in just 10 years. However, the most impressive statistic of all is the increase in private foundations during that same 10-year period. The number of private foundations grew from 58, 774 in 1996 to 109,852 in 2006 –
a whopping 86.9 percent increase!The United States is not the only country with a large number of nonprofit organizations. In 2006 Russia was estimated to have 277, 000 and India was estimated to have between one and two million nongovernment organizations.
Economic conditions in the United States have resulted in numerous business failures, and the nonprofit sector is feeling the fallout. Established nonprofits are beginning to lose the support that they have counted on for years. Charities have long relied on foundations for funding, but because of the conditions in the stock and securities markets, many foundations no longer have the monetary resources to provide for grants and other forms of funding. Over the next few years nonprofit organizations will continue to feel the impact of the economic downturn.
The nonprofit entities themselves have an impact on the economic system. IRS calculations show that the total revenue for all public charities exceeds 1.15 trillion dollars. Nonprofits and charitable organizations, which provide supplemental support to both the government and private sectors, play a significant role in American society.
It is important for the charitable sector to maintain the highest levels of integrity and credibility. While the nonprofit sector must remain independent, it is appropriate for government to provide oversight and, where necessary, enforcement. Nonprofit organizations should be held to a higher standard than their for-profit counterparts, and as fiduciaries of other people’s money, they must exercise
duty of care.
The huge growth of the nonprofit sector in such a short period of time has influenced Congress and the IRS to greatly modify the reporting requirements for nonprofit organizations. Government has determined that the Form 990 series of tax returns is the strongest method to communicate to all sectors of society what is transpiring in aggregate and specific accomplishments of respective organizations. Since Form 990 returns are public documents, the information they contain is available to anyone who wishes to review them. By expanding the amount of information that is to be reported in Form 990, the transparency of organizations will increase.
2
Appendix A contains a breakdown of the numbers and types of U.S. organizations as gathered by the National Center for Charitable Statistics. The breakdowns of the different types of entities reflect considerable growth in a number of specific sectors.
The reasons for the increasing numbers of nonprofit organizations in the United States and nongovernment organizations throughout the world are many and varied. The perception that government has the responsibility to provide humanitarian services to those who are in need has existed for a very long time. However, many problems or socioeconomic conditions cannot be addressed because governmental agencies, restricted by funding, do not have the necessary resources to deal with them. The nonprofit sector developed as a place where government and the private sector could collaborate to improve socioeconomic conditions and enhance the quality of life.
The increase in the number of organizations has resulted in some duplication of provided services which in turn have resulted in excess administration costs and a reduction of the funds that are available for program services. There is a dire need for enhanced monitoring of the nonprofit sector to create an effective utilization of resources and eliminate waste. The revised Form 990 will aid in monitoring programs and offer many opportunities to improve the nonprofit sector.
Formats
Book Details
About the Book
The object of this book is to educate both new and experienced preparers to deal with the numerous changes relating to the filing of the 2008 Form 990 series of tax returns. While the old 990 had just two schedules to complete, the new form has 16 schedules.
This book offers a practical, hands-on approach to completing the new challenging form.
Major Topics:
• Changes in filing requirements for Form 990 and
990EZ phased in thresholds
• Electronic filing requirements
• New: Preparation of the new required summary
of the organization’s mission, activities, and
current and prior years’ financial results
• Revised: Statement of program service accomplishments
– reporting of new, ongoing, and discontinued
achievements and their related revenue and expenses
• New: Statements regarding other IRS filings and
tax compliance
• New: Governance, management, and disclosure—
information regarding governing body and its
management, policies, and disclosure
• Revised: Compensation schedules for offices,
directors, and key employees
About the Author
Stuart P. Sobel is the president of Stuart Sobel Consulting, Inc. and Tax Media Network, Inc. located in Indianapolis, Indiana. Stuart Sobel Consulting, which provides tax and nonprofit consulting in many areas including charitable giving, joint ventures, and tax controversy issues, has assisted in the creation of thousands of diverse businesses and nonprofit organizations (public charities, trade associations, athletic organizations, and more). The firm has helped start charities in North America, South America, Africa, and Asia. Tax Media Network provides tax and nonprofit education.
During the 30 years he worked for the Internal Revenue Service, Stuart held a number of high level positions. He has served as a board member and Treasurer of the Central Indiana Better Business Bureau and as a board member of the Small Business Administration Service Corps of Retired Executives (SCORE). He is a Past President of the Ohio University College of Business Administration Alumni Society. He has served as an officer of a number of other nonprofit entities including foundations, supporting organizations, and international humanitarian organizations.
Stuart has been teaching tax and charity issues for more than 40 years. As a member of the adjunct faculty of Indiana University and Indiana University/Purdue University of Indianapolis, Stuart has taught courses on business startup, nonprofit management, accounting, and taxation. Tax agencies have referred to him as a tax expert and members of the media have called him the "Guru of Giving". Stuart is the producer and talk show host of his nationally syndicated weekly radio program, Wise Choices: Taxes and Charity Today.