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Recognize the Limitations of the Form 990

The current 990 was designed as a reporting device for compliance with the tax laws. There are variations in accounting rules between data reported to the IRS and other public reporting. Here are just a few of the limitations of the Form 990:
  • Generally accepted accounting principles require that certain donated services be recognized as income, but IRS rules do not acknowledge this form of income.

  • The Form 990 does not tell readers what percentage of an organization's money goes to Program Services. It only tells what percentage of all revenue went to Program Services. These are very different numbers.

Published in Focus on Accountability, May 1999.
Reprinted with permission of the Evangelical Council For Financial Accountability.

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