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What Does Tax Season Mean for Tax Exempt Organizations?

While nonprofit organizations are tax-exempt, that does not mean we are completely free from IRS oversight. The IRS requires that nonprofit organizations annually submit very detailed information on “IRS Form 990,” commonly simply called “990.” The 990 requires a great deal of meticulous organization and information extraction in order to remain compliant with the law.

Because fiscally sponsored projects enjoy a shared nonprofit status under Community Initiatives, individual projects do not need to spend time on these requirements. The work required for every nonprofit to complete a 990 varies widely based on the level of complexity at any given organization. Whether it takes hours or days, we have heard the process described by colleagues as “tedious,” “time-consuming,” and even “painful.” Community Initiatives’s completion of the 990 is a key service that we provide to our network of fiscally sponsored projects. This service exemplifies our mission to provide professional services that alleviate time-consuming administrative tasks, so that ultimately projects have more time to focus on their own vital missions in their own communities.

So what exactly is required in a 990? On a macro-level, the form requires the organization’s income, expenses, and executive staff salaries. On a micro-level there are many details to record about the mission, programs, lobbying, finances of the entity, disclosure of potential conflicts of interest, board member compensation and staff, as well as other attributes having to do with financial accountability and fraud avoidance. All of this information is required in order to maintain status as a tax-exempt nonprofit.

The 990 represents the public disclosure of information — so they must be made available to anyone who would like to see it. Community Initiatives hosts the previous three years of reporting right on our website. The 990 reporting from other nonprofits can be found through online services like GuideStar.

If that sounds overwhelming, our projects should breathe a sigh of relief. As a fiscal sponsor, Community Initiatives is happy to take on this reporting burden so that our projects can focus on what matters most to them: working to improve their own communities.