The new Form 990

Discussion of the new IRS Form 990 (the usually informational tax return filed by nonprofit organizations) will take books and books. One small area of the new form attted attention on EXECSEC, the dicsussion list (listserve) for executive durectors who are members of the American Society of Association Executives (ASAE).

A discussion thread on disclosing staff compensation to board members elicited the following response from me:

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With the new 990, one disclosure element is whether the *entire* board reviewed the final Form 990.

From the new form and from the instructions:

2008 Form 990, Part VI, Line 10:
Was a copy of the Form 990 provided to the organization’s governing body before it was filed? All organizationsmust describe in Schedule O the process, if any, the organization uses to review the Form 990

Line 10. Governing body review of Form 990. State “Yes” only if a copy of the organization’sfinal Form 990 (including required schedules), as ultimately filed with the IRS, was provided toeach voting member of the governing body of the organization, whether in paper orelectronic form, prior to its filing with the IRS. Also describe in Schedule O the process, if any,by which any of the organization’s officers, directors, trustees, board committee members, ormanagement reviewed the prepared Form 990, whether before or after it was filed with the IRS,including specifics regarding who conducted the review, when they conducted it, and the extentof any such review. If no review was or will be conducted, state “No review was or will be conducted.”

Specifically in regard to disclosure of compensation, most nonprofits (including associations) will not have to disclose most staff compensation on the Form 990. Here are the disclosure thresholds:

Overview. Organizations are required to list in Part VII, Section A the following officers,directors, trustees, and employees of the organization whose reportable compensationfrom the organization and related organizations (as explained in the Schedule R instructions) exceeded the following thresholds:
• current officers, directors, and trustees (no minimum compensation threshold)
• current key employees (over $150,000 of reportable compensation)
• current five highest compensated employees other than officers, directors, trustees, orlisted key employees (over $100,000 of reportable compensation)
• former officers, key employees, and highest compensated employees (over $100,000of reportable compensation, with special rules for former highest compensatedemployees)
• former directors and trustees (over $10,000 of reportable compensation in the capacityas a former director or trustee)

NOTE: if an Executive Director/CEO is an ex officio director or officer of the corporation, then his/her total compensation (salary plus benefits and expense allowances) must be reported, regardless of amount.

In short, beginning next year, not only do all EDs and key & highly compensated employees have to disclose their compensation on the 990, but the full board is expected by the IRS to review the 990 prior to filing. There is a great opportunity for nonprofits to revise or implement policies that address the new reporting requirements in such a way as to emphasize transparency within the Federal regulations.

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