CFG Classroom

V. Understanding Form 990

Form 990 is the tax return filed by private foundations with the Internal Revenue Service.

This informative online course provides an overview of the content, value, and ease of use of Form 990. This course is designed to teach you:

1. what Form 990 is
2. the type of information contained in Form 990-PF
3. the purpose of Form 990
4. how to obtain physical copies of Form 990
5. how to obtain information about specific items in Form 990

General Background Information

Form 990, entitled "Return of Organization Exempt From Income Tax," is a report that must be filed annually with the Internal Revenue Service (IRS) by organizations exempt from Federal income taxes under section 501 of the Internal Revenue Code (IRC), and whose annual receipts are "normally" more than $25,000 a year. Form 990 is an "informational" return because the filing organizations generally do not pay income taxes.

Many types of nonprofit organizations are exempt under section 501 of the IRC. Our primary focus is on private foundations and charitable organizations. Charitable organizations are exempt from income taxation under section 501(c) of the IRC. In addition to filing the Form 990, they must also file Schedule A to Form 990. (Schedule A is not required for most other 501 organizations.) Organizations are typically exempt under section 501(c) if they pursue charitable, educational or religious purposes.

Organizations that are classified as private foundations (typically organizations funded by very few sources) are required to file a Form 990-PF. The 990-PF is the tax return U.S. private foundations file with the IRS. This public document provides financial data for the foundation, names of trustees and officers, and application information. Also, it may be the only source from which to obtain complete grant lists for small and mid-sized foundations. Larger foundations often issue annual reports and have websites.

Availability Timeframe

The IRS filing deadline for most foundations is five and one-half months after the fiscal year-end. The IRS processes and scans each 990-PF into a digitized format, which takes several more months. Therefore, it usually takes at least 9 months before a Form 990 becomes widely available to the public. Of course, copies of these forms must be given to anyone who requests them (either in person or in writing) and pays a reasonable fee.

The most pertinent information for grantseekers has been compiled by CFG, and included in the foundation profiles. However, grantseekers who desire more information may request Form 990 directly from the foundation, or obtain recent forms from Guidestar.org.

The Form 990 serves two essential purposes. First, it provides information that enables government agencies (the IRS and state charity regulators) to more effectively enforce laws governing nonprofits. Second, Form 990 provides extensive financial information, including information about an organization's financial condition, sources of income, and grantmaking.

Advice to Keep in Mind Regarding the Form 990:

1. Rather than examining a foundation's Form 990 for one year, look at the last three years (by law, these must be made available by the Foundation). You will learn much more about its grantmaking habits and your organization's chance of success.
2. Valuable information about the Form 990 can be found in the IRS's "Instructions for Form 990 and Form 990-EZ" and "Instructions for Schedule A (Form 990)." These instructions, which provide general information and explain what each line means, are clear and very helpful. Go to http://www.irs.gov on the internet, and run a search for Form 990 under the "Search Forms & Publications" search feature.
3. The suggestions offered in this online course regarding interpretation of information in Form 990, are not exclusive. In other words, there may be more than one way to interpret a piece of information. Be aware that information throughout a Form 990 is often interrelated--sometimes to information that is not reflected in the form.