The Form 990 in 2000 Project

One of NSFRE's key goals in its new Long-Range Plan is to expand its advocacy and government relations efforts. While NSFRE's Public Affairs Department will be increased so as to provide greater and more detailed advocacy services to members, chapters will be asked to begin coordinated efforts to reach out to local government officials and regulators.

One way chapters can begin these efforts is through the Form 990 in 2000 Project. Don't be intimidated by the title or if you don't know much about the Form 990 other than it is your organization's annual financial reporting form. The Form 990 Project is the perfect way to begin bringing your chapter into contact with local state regulators to discuss issues and problems related to fund raising and the not-for-profit sector in your community. And getting started can be easy because some states have already begun the project. But before anymore is revealed, a little background on the Project.

Three factors contributed heavily to the development of the Form 990 in 2000 Project. The first is the expansion of IRS regulations. Since the 1950s, the IRS has required that Form 990s be made available for public inspection. The new regulations on public disclosure mandate that not-for-profits must distribute copies of their Form 990 to any member of the public that requests one. The regulations will probably go into effect later this year. The second is the growing trend of posting Form 990s on the Internet. Some state charity offices, watchdog groups and other organizations are displaying the Forms on their websites, meaning anyone can find out detailed information about your organization.

The result of the first two factors means more of the public will have access to more information about not-for-profits than ever before. So far, so good, but the third factor presents the real problem. According to studies from professional accountants, a large number of Form 990s (60-70%) contain major errors. These mistakes are not just simple calculation errors, but huge discrepancies in numbers and certain required information omitted or misplaced.

The challenge, then, is that increasing technology means inaccurate and incomplete information being distributed more quickly to the public. The consequences for not-for-profits could be immense. Researchers and public policy makers rely on data from the Form 990. If that information is incorrect, how can we expect our elected officials to make good policy? How can we tell our story to the public if all they see is information that is at best incomplete, and at worst full of errors?

The primary goal of the Form 990 Project is to bring together in each state representatives of the not-for-profit sector, the accounting profession, and elected officials and regulators to discuss increasing the quality of the information on the Form 990. These state groups (which will be known as "accountability collaboratives" will work to increase awareness and importance of the Form 990. On a national level, the Project will publish a guide to the Form 990 and other not-for-profit reporting, and develop a Nonprofit Management Assistance and Accountability Network, which will provide to organizations access to consultation, training, and assistance.

But the state collaboratives don't have to limit the issues they discuss solely to the Form 990. Collaboratives, convened and led by the NSFRE chapter(s), can also discuss issues related to fund-raising laws and other not-for-profit legislation, public disclosure, standards, and ethics. The collaboratives can be used to replicate the work of other state projects (such as Maryland Gives!, which looked at ways to increase charitable giving in that state) or to reach out to other associations, watchdog groups, and other organizations. The possibilities are only limited by what the chapter wants to accomplish.

The Form 990 Project is a great opportunity for chapters to get involved in government relations. An important point is that the IRS and the National Association of State Charity Officials (NASCO) are very interested in the success of the Project since, by legislative mandate, they are responsible for the quality and success of the Form 990. They have committed their support to the Project and are willing to encourage IRS staff and NASCO members in each state to work with the local collaboratives.

NSFRE has agreed to take a leadership role in the Form 990 in 2000 Project. Information about the Project will be distributed with the Public Awareness Initiative in April. NSFRE is looking for interested individuals in each chapter to serve as representative to these state collaboratives and, in some cases, to begin the process. Some states have already started up such collaboratives and will be looking for NSFRE participation.

Published January/February 1999