Form 990 is an information return that most secular exempt organizations with incomes above $25,000 are required to file annually with the IRS. "GuideStar's comments are based on our role as a provider of nonprofit data-only some of it from the 990-to a broad array of users," said Bob Ottenhoff, GuideStar's president and CEO. "Our users include individuals, board members, media, and service providers, as well as highly sophisticated nonprofit experts. From our perspective, the data found in the 990 are often confusing and misleading. It is also important to remember that the 990 is only one way people learn about a nonprofit organization, since there is a growing marketplace of voluntary disclosures."
Rather than providing a line-by-line analysis, GuideStar's comments on the draft 990 focus on the larger picture and present four key points:
- Less Is More. Form 990 should be simplified, and the highest priority should be placed on collecting data that are useful, complete, accurate, and timely.
- Minimize the Burden on Filers. The costs of compliance with the proposed form need to be balanced against the utility and accuracy of the information gathered. The proposed form's increased complexity will also work against improving the timeliness of the returns.
- Help Decision Makers. As a public disclosure form, the Form 990 (and the Summary Page) must present an accurate picture of the finances and activities of a nonprofit; the current draft does not meet this objective. In fact, it creates an inaccurate picture by presenting financial ratios and compensation data out of context.
- Don't Rush. Changing the 990 will affect the sector for years to come. GuideStar urges the IRS to take the time to gather the data needed to create the most effective return possible. Utility, accuracy, and timeliness can only be achieved in consultation with the organizations that file the 990 and the diverse audiences that use it. Many have already shared their feedback on the proposed form. The service should take further advantage of nonprofits' and the public's sincere desire to help the IRS achieve its goals.
GuideStar, www.guidestar.org, connects people and organizations with information on the programs and finances of more than 1.5 million IRS-recognized nonprofits. GuideStar serves a wide audience inside and outside the nonprofit sector, including individual donors, nonprofit leaders, grantmakers, government officials, academic researchers, and the media.
News ContactSuzanne E. Coffman
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