Dramatic IRS Shift for Nonprofits
Feb. 17, 2009, Philadelphia Inquirer — Tax time is approaching, but before you start complaining, talk to your favorite charity.
Financial officers and accountants for the largest nonprofits this year are facing the most dramatic change in Internal Revenue Service reporting requirements in 30 years.
Nonprofits, which don't pay federal taxes, but still must report their income, are confronted with a new, more complicated public-reporting form, called form 990, that demands a deeper look at how organizations operate. It now delves into questions such as how top officers are compensated and what potential safeguards exist to prevent corruption.
Donors and others can scrutinize the forms filed by nonprofits at several Web sites.
The new form is designed to improve accountability and transparency. This year, only the biggest nonprofits — those with at least $1 million in revenue or $2.5 million in assets — need use it. By 2011, all will.
The core form has grown from nine to 11 pages. It now has 16 possible schedules, up from two.
Mary Anne Hakim, a Washington accountant specializing in nonprofits, estimated it would take 35 percent to 40 percent more time to complete.
Sudha Iyer, vice president for finance and administration for the New Jersey Audubon Society, thought it might be even more demanding.
The old form took her about three days.
"I've told colleagues, it is now going to take a week or more," she said. "But it is a good thing because now we can do some spring cleaning. We will reexamine our existing policies and make sure they are in line with the best practices."
Which is what the IRS was hoping.
"We don't think it is our place to tell you how to govern, but we do believe it's our place to educate and push organizations into developing a governance structure of their own," Lois G. Lerner, director of the IRS's exempt-organizations, said when the new forms were previewed two years ago.
