Tips for Reading an Organization’s Form 990 (Suggested web-address: http://www.npccny.org/Form_990/990.htm) FAQs 1. What is an Internal Revenue Service (IRS) Form 990? The Form 990 is an annual reporting return that certain federally tax- exempt organizations must file with the IRS. It provides information on the filing organization's mission, programs and finances. 2. What organizations are required to file Form 990? - With some exceptions, federally tax-exempt nonprofits that have incomes of more than $25,000 - All 501c3 private foundations, regardless of income 3. Which organizations are not required to file Form 990? - Nonprofits that have not received tax-exempt status from the IRS - Most faith-based organizations - Nonprofits with incomes of $25,000 or less - Subsidiary organizations covered under a group return filed by the parent organization 4. What is the difference between Form 990, Form 990-EZ, and Form 990-PF? - Form 990-PF is the form that all 501c3 private foundations and 4947a1 non-exempt charitable trusts must file; only those types of exempt organizations use Form 990-PF - Form 990-EZ is the "short form" for other 990 filers; exempt nonprofits with incomes between $25,000 and $1 million and total assets of less than $2.5 million may file Form 990-EZ, although they are allowed to file Form 990 if they prefer - Form 990 is the "long form" that other 990 filers with incomes of more than $1 million or assets above $2.5 million must file The Layout of a Form 990: Revenue, Expenses and Changes in Net Assets or Fund Balances Revenue (lines 1-12) Line 1. Contributions, gifts, grants, and similar amounts received are broken into several categories. Direct public support may include cash gifts, bequests from individuals, and foundation and corporate grants. Indirect public support includes amounts received through federated fundraising campaigns, such as those run by the United Way. Government contributions (grants) are funds provided by the government but are distinct from government contracts or fees for services, which are included on line 2. Line 2. Program service revenue represents fees paid to an organization for services related to its nonprofit purpose. Examples of such fees include tuition received by schools, admissions paid to an art museum, payments for medical services at a hospital, and government contracts. Expenses (lines 13-17) Line 13. Program services is the amount a charity spends to perform its tax- exempt activities. Line 14. Management and general includes the day-to-day expenses for the overall operations of the charity, but excludes the direct costs of conducting its program or fundraising activities. It may include accounting and legal costs, insurance, office management, and the costs of producing an annual report. Line 15. Fundraising indicates the amount spent to raise the revenues reported on lines 1a, 1b, and 1c. Net Assets (lines 18-21) Line 18. Excess (or deficit) for the year shows how much an organization took in compared to what it spent. Line 21. Net assets or fund balances at end of year indicates the amount a charity has on hand, usually in cash and investments. Statement of Functional Expenses (lines 22-44) Potential donors can use this section, which highlights such overhead costs as salaries, occupancy (rent), telephone, and travel, to help understand how a charity is allocating its resources. Statement of Program Service Accomplishments This section offers a snapshot of the major activities (and associated program expenses) performed during the previous year. Balance Sheets Balance sheets are divided into three subcategories: assets, liabilities, and net assets or fund balances. The lists of assets and liabilities paint a picture of the financial strength or weakness of an organization. Line 50. Receivables from officers, directors, trustees, and key employees reports outstanding loans to charity officials. Net Assets or Fund Balances Line 67. Unrestricted assets are resources currently available to an organization to fulfill its tax-exempt purpose. While typically a large portion may be in cash, these may not necessarily be liquid assets. Line 68. Temporarily restricted assets are resources currently available for use, but only as indicated by the donor. Line 69. Permanently restricted assets always carry limitations. For instance, a donor might allow the charity to spend income interest from a contribution but not the principal. Line 73. Total net assets or fund balances indicate the total amount of financial resources available to an organization at that point in time. Reconciliation Statements These sections reconcile any differences between the revenue and expenses shown on the audited financial statements and the revenue and expenses shown on the Form 990. Current Officers, Directors, Trustees, and Key Employees Here you'll find a list of board members, some of the charity's executive staff, and key employees who exert a significant influence on an organization's activities. The list may include titles, salaries, or compensation. Schedule A lists compensation for the five highest-paid employees (other than officers and board members) and the five highest-paid independent contractors for professional services, such as legal and accounting, paid in excess of $50,000. Former Officers, Directors, Trustees, and Key Employees that Received Compensation or Other Benefits This section describes any former officers, directors, trustees or key employees who received compensation or other benefits during the year, enabling the IRS to determine the extent to which such persons are still being paid. Other Information This section focuses on the operations of an organization during the course of a year. Information Regarding Taxable Subsidiaries and Disregarded Entities This section indicates any for-profit businesses legally owned by a charitable organization.