While many non-profit organizations may be exempt from income taxes, they are not exempt from the federal government’s recordkeeping requirements. Among those requirements are tracking revenues and expenses and reporting those items to the Internal Revenue Service (IRS) by way of Form 990. The requirement applies to organizations as small as the local Little League affiliate or as large as a major hospital.
While organizations file Form 990 because it is a requirement to maintain their exempt status, many may not realize that there are many other ways the Form 990 can be used to benefit your non-profit organization.
The Form 990 not only serves public purposes, it can serve organizational purposes as well, allowing board members, donors and others access to information about an organization’s financial management, operations and governance. It is a tool—a research document—for understanding your organization, its strengths and its weaknesses.