Nonprofit Tax Returns are Public Information

I touched on this in a previous newsletter, Responsibilities of a Nonprofit.

Nonprofit tax returns are generally public information in the United States. This means that anyone can access and review them, with a few exceptions. Here’s a breakdown:

What’s Public:

• Form 990, 990-EZ, or 990-PF: These are the main tax forms filed by most nonprofits. They disclose crucial information such as:
  • Financial statements (revenue, expenses, assets, liabilities)
  • Programs and activities
  • Governance structure and leadership
  • Compensation of officers and employees
  • Donor information (except for private foundations)
• Form 1023: This form is filed by organizations applying for tax-exempt status and also becomes public.

NOTE 1: Organizations making less than $50,000 don’t have to file either form but do have to let the IRS they’re still in business via a Form 990-N “e-Postcard.” Form 990-N is now submitted electronically; there are no longer any paper forms.

NOTE 2: If a IRS tax-exempt organization makes less than $200,000 in revenue and has less than $500,000 in assets, thay may file the shorter form 990-EZ. Such an organization may file a long 990 but not a 990-N.

NOTE 3: For a very small or short-duration nonprofit effort that does not yet have its own tax-exempt 501(c)(3) status, a fiscal sponsor offers a unique arrangement that allows it to access some of the benefits of tax-exemption without going through the lengthy process of obtaining it themselves. A fiscal sponsor acts in the capacity of an established “parent” organization that oversees a “sponsored project.” The fiscal sponsor files the IRS form 990, not the nonprofit effort because they do not have non-profit status themselves.

Where to Find Them:

• Organization’s Website: Many nonprofits post their 990s directly on their websites for transparency.
• IRS Website: You can search for an organization’s 990 on the IRS Tax Exempt Organization Search (TEOS) tool.
• Nonprofit Databases: Websites like GuideStar and ProPublica NonProfit Explorer aggregate and analyze 990 data, offering additional insights.

Exceptions and Limitations:

• Private Foundations: Their donor information remains private.
• Specific Schedules: Some additional schedules attached to the 990 might not be public.
• Accessibility: Finding and understanding 990s can be challenging for non-financial experts.

Why are they public?

Transparency is considered crucial for maintaining public trust in nonprofits. The public disclosure requirement allows donors, grantmakers, and other stakeholders to:

• Evaluate an organization’s financial health and practices.
• Hold leadership accountable for their decisions.
• Make informed decisions about supporting the organization.

Additional Resources:

• IRS Public Disclosure and Availability: https://www.irs.gov/charities-non-profits/public-disclosure-and-availability-of-exempt-organization-returns-and-applications-public-disclosure-overview
• Candid (formerly GuideStar): https://www.guidestar.org/
• ProPublica NonProfit Explorer: https://projects.propublica.org/nonprofits/
• National Network of Fiscal Sponsors: https://www.fiscalsponsors.org/
• Council of Nonprofits: https://www.councilofnonprofits.org/running-nonprofit/administration-and-financial-management/fiscal-sponsorship-nonprofits
• Fiscal Sponsorship: https://propelnonprofits.org/fiscal-sponsorship/why-choose-fiscal-sponsorship/

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