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Association Financial Management

"The New Form 990"
By Suzanne C. Pine, Executive Vice President

If you are in the Not-For-Profit world, you know firsthand that there has been a lot of hype about the new Form 990. You have probably scanned articles on the topic. You may have even felt more confused after reading more on the topic. Are you sure you understand the impact that the new Form 990 might have on your organization or how you might begin to explain the changes to the members of your Board?

The new Form 990 has been redesigned to focus on enhancing transparency and promoting tax compliance. New questions exist focused on governance, management, and disclosure topics. There are a few areas where you might begin your journey to prepare for the 2008 Form 990 filing that will be due in the 2009 calendar year.

  1. Conflict of Interest Policy – Not only will your organization need to develop a policy for each Director to read, understand, and sign-off on, you will also need to make the statement public. The policy needs to be in writing and have provisions for an annual sign-off. The new form will ask if your organization has a policy that provides for regular monitoring and enforcement of the policy.
  2. Whistleblower Policy – Many Association Management Companies (AMCs) already have a Whistleblower Policy for their staff. Not-for-Profit organizations will now also need a similar policy that will also need to include a provision for their staff, volunteer leaders, and also members.
  3. Document Retention and Destruction Policy – Again, this is a standard policy for most AMCs. Now, Boards will need to review and sign-off on a similar policy.

In addition to the actual creation of the policies listed above, the new Form 990 will also ask questions about minutes, compensation policies, and even a governance review of the Form 990, prior to signing. The current draft instructions request that your entire Board review the Form 990, prior to submitting a signed form to IRS. If your organization has not already done so, they may want to consider a committee of the Board (Audit or Finance Committee) to be responsible for the detailed review of the form with a report due back to the Board, prior to signing.

Due to the “Salary Disclosure of Key Employees” reporting requirement, the leadership of your organization may want to begin to discuss plans for educating volunteers, top management, staff, members and other key stakeholders on how the changes to the new Form 990 will impact the organization when this public form is complete and available.

This article is really focused on highlighting a few key areas where you and your Board can get started. Your organization shouldn’t delay in building plans to enact the necessary policies, procedures, accounting and data collection changes to address the required disclosure questions on the 2008 Form 990. You want to make sure that you are doing everything possible to present your organization in the best possible light!

For additional detailed information on the new filing requirements, contact AMC Institute at www.amcinstitute.org or your own attorney or accountant.