I can remember applying for a job with a nonprofit organization, and I asked for copies of three years of their IRS Form 990’s so that I could prepare for the interview. Reviewing their Form 990’s would give me great insights into their mission, programs, board governance and management practices. They didn’t share the Form 990’s or grant me an interview.
That didn’t stop me from getting copies of their Form 990’s. I went to GuideStar and got copies of their most recent Form 990’s and began to analyze them. This is what I found: I found that the organization was late with more than one year of filings. Approximately two-thirds of the organization’s board members were also on payroll, including the Board President. They were listed as board members in one section with their respective titles, and listed as employees with different titles in another section, along with their compensation. The Board President had also taken out a loan from the organization, which he eventually paid back. Lending was not one of the organization’s functions. I also noticed that the organization was formed with a single gift, and had run an operational deficit its entire institutional life. Apparently, the organization was living off the original grant, and had not generated sufficient revenue to replenish the funds they started with. Not being called for an interview was a blessing in disguise.
Beyond the obvious conflicts of interest and operational issues, the organization was in violation of the IRS Code, which requires nonprofit organizations to provide up to three years Form 990’s upon demand. In fact, the IRS suggests that organizations post three years of Form 990’s on their organizational websites so that the public can inspect them on demand. The same is true for the organization’s Form 1023, the application for tax-exempt status.
I was very much aware that I could have reported the organization to the IRS for failure to provide copies of their Form 990’s for inspection, but I chose not to.
But what if I did decide to pull the trigger? What were some of the consequences the organization could have faced? The IRS website has an article, “Public disclosure and availability of exempt organizations returns: Non-compliance with exempt organizations public disclosure requirements”. They share a commonly asked question and response as follows:
What should I do if an exempt organization will not let me see its Form 990 or 990-T returns or exemption application materials?
Write to:
IRS EO Classification
Mail Code 4910
1100 Commerce Street
Dallas, TX 75242
Your letter should provide the name and address of the organization that refuses to allow public inspection or provide copies of its documents, and request that the documents be made available for public inspection.
The Tax-Exempt/Government Entities Division of the IRS will contact the organization and arrange a time during which the documents may be inspected. If the organization fails to provide the documents at the agreed upon time, statutory penalties may be assessed.
If you ever find yourself in a position in which you ask a nonprofit organization for a copy of their Form 990 and they refuse, remember that the IRS posts copies of organization’s Form 990’s on their website. You can also go to Candid (formerly known as GuideStar) at https://candid.org or Pro Publica Nonprofit Explorer at https://projects.propublica.org/nonprofits/ to find copies of Form 990’s for any domestic nonprofit organization that files the long form.
