Q&A #53 – How should a nonprofit provide a copy of its Form 990 to the Board before filing?
Question: My nonprofit is finalizing its Form 990 and one of our Board members inquired about Part VI, Line 11a on page 6, which asks: “Has the organization provided a complete copy of this Form 990 to all members of its governing body before filing the form?” What is required for us to check “Yes”?
Answer: Virtually all organizations check “Yes” to Part VI, Line 11a on page 6 of the Form 990, to affirm that they provided a complete copy of the Form 990 to all members of their governing Board, and failure to check “Yes” can negatively impact an organization’s reputation and appearance to honor transparency (and for publicly supported charities, affect their rating on charity watchdog websites). However, organizations should put careful thought into what it means to satisfy this standard.
The general purpose behind this question is to make sure the Board members all get a chance to see the Form 990 before filing to satisfy basic transparency and oversight standards. It is important to note that this question does not ask or require that each Board member must approve the Form 990 before filing. This is made clear in an example in the instructions to the Form 990, which states that “The organization can answer ‘Yes’ if it emailed all of its governing body members a link to a password-protected website on which the entire Form 990 can be viewed, and noted in the email that the Form 990 is available for review on that site.”
The review process varies by organization, but one commonly used process is as follows:
Inform Board members when you are close to having a final draft Form 990 for Board member inspection, questions, and comments.
Send the final draft Form 990 in PDF via email to all Board members 5 to 10 business days before the expected filing date.
Request that they contact the executive leadership if they have any comments or questions.
If they do not have any comments or questions, there is no requirement to contact the executive leadership.
After the 5 to 10 business day period, staff can go through the final approval process and have the Form 990 filed.
Save the email to Board members to show the organization met the standard in Part VI, Line 11a of the Form 990.
A short summary of the pre-filing approval process for the Form 990 should be provided in response to the next question, Part VI, Line 11b, which asks the organization to “[d]escribe in Schedule O the process, if any, used by the organization to review this Form 990.” Though not mandatory, virtually all organizations describe their Form 990 review and approval process in response this question.
Planning Tip – Nonprofits should periodically evaluate and reconsider the review and approval process and how they share the Form 990 with their Board and other leadership, such as a finance committee. First, check how you responded to Form 990 Part VI, lines 11a and b in the past. Next compare the Form 990, Schedule O disclosures with actual practices and note any differences. Finally, consider making changes to your review and approval process to enhance Form 990 preparation and compliance. This will help your organization to honor transparency and improve the quality of its Form 990.
A thoughtful observation of your Form 990’s review, approval and dissemination practices will heighten awareness and improve the final results of one of your organization’s most visible fiscal and financial documents.
If you have a question you would like to submit to SE4N, send it to us using the contact form and we will consider answering it in a future post. Please do not send confidential information.
