Nonprofit financial disclosure requirements

• Disclosure requirements by IRS

Nonprofit organizations are formed by filing initial registration statements to related state authorities. However, in order to exempt federal income tax they need to obtain tax exempt status from the IRS and are subject to the requirements of annual tax filings.

Most public charities nonprofits, except religious organizations or those with less $25,000 in annual revenues, much file an annual IRS Form 990. Filing organizations with gross receipts of $100,000 or less and total assets less than $250,000 can file a simplified form, 990 EZ. If a nonprofit earns over $1,000 from activities that are unrelated to their tax-exempt mission, it must file a form IRS 990T and may need to pay an unrelated business income tax (UBIT). Private foundations are required to file Form 990-PF.

Nonprofits are required to making their IRS filings available to the public on a same-day basis and for only a reasonable copying charge, unless they make their 990s widely available on the Internet. This requirement has largely been fulfilled by the creation of Guidestar, where you can get access to scanned copies of 990s from most nonprofits.

• Disclosure requirements by state authorities

At the state level there is considerable variation in the level of oversight on nonprofit finances. Many states require audited financial statements (following GAAP) along with IRS 990 Forms for annual filing. Other states require only Form 990, either Form 990 or audited financial statements, or no requirements at all. In 1997, the National Association of State Charities Officials and the National Association of Attorneys General developed a Unified Registration Statement (URS) to standardize, simplify, and economize compliance under the related state laws. Today, 32 states and the District of Columbia are allowed to file the unique state forms or the URS. In comparison, Minnesota has a more comprehensive nonprofit disclosure system than many other states. It has also created a searchable web-database that permit users to obtain state filing information on Minnesota nonprofits [?].

• Disclosure requirements by other parties

In addition, federal grant-making agencies or institutional donors may require that nonprofits provide supplemental disclosures. For example, since 1990, nonprofits receiving substantial direct or indirect federal assistance are subject to even more stringent auditing requirements than GAAP, governed by an Office of Management and Budget Circular A-133.