Although not technically required, the IRS recommends nonprofit board members be provided with a copy of the organization’s Form 990 before it is filed.

Why is This Considered a “Best Practice?”

  • Assists in fulfilling board responsibilities for oversight of financial reporting.
  • Exhibits strong governance practices.
  • Enhances donor confidence – donors may be more likely to support organizations that demonstrate accountability and transparency.
  • Form 990s are public documents available on the IRS website, as well as several other charity watchdog sites. It’s important for the board to see and understand information that is publicly available to donors, other supporters, and even critics.
  • Shows compliance with IRS recommended policy.

What Items Should a Nonprofit Board Member Focus on During Their Review?

  • Mission, purpose, and program accomplishment narratives – this tells the organization’s story and details how success is measured. Board members should be well-versed in this.
  • Financial statements – these should be consistent with what has been reviewed and approved previously. Trends and discrepancies should be discussed.
  • Governance practices – have the other IRS recommended policies been implemented and followed? Why or why not?
  • Officer compensation – does this disclosure match up with your expectations? What will the public’s reaction to this be, and do you know how to respond?
  • Marketing – if you were a donor, would you be compelled to support the organization?

Review of Form 990 is more than just a compliance measure – it’s an opportunity to enhance transparency, accountability, and ensure the story being told to the public aligns with the organization’s mission to encourage donor support.