Board Review of Form 990: Why It Matters for Nonprofits

Although a board review of IRS Form 990 is not legally required, it is widely considered a best practice for nonprofit organizations. Proper oversight not only supports compliance but also builds public trust and strengthens fundraising opportunities.

Form 990—Return of Organization Exempt from Income Tax—is publicly available and reviewed by donors, grantmakers, regulators, and policymakers. Importantly, the form requires nonprofits to disclose whether the governing body had the opportunity to review it before filing.

Why Form 990 Is So Important

• Compliance & Legal Requirements
  Filing is required by the IRS and many states to maintain charitable registration.

• Public Accountability & Trust
  Transparent reporting fosters confidence among donors, stakeholders, and the public.

• Primary Data Source for Funders & Policymakers
  Grantmakers and government agencies rely on Form 990 for accurate, comparable information.

• Public Relations Opportunity
  Beyond compliance, Form 990 is a chance to showcase your organization’s mission, programs, and impact.

Key Areas for Board Review

1. Statement of Program Service Accomplishments – Part III

This section highlights your mission and top three program services. Use it to tell your organization’s story with compelling narratives and measurable outcomes (e.g., individuals served). Underdeveloped responses may hurt your credibility with funders.

2. Governance, Management, and Disclosure – Part VI

This section addresses policies that demonstrate strong governance, such as conflict of interest, whistleblower, and executive compensation review. While not legally required, “yes” answers reassure funders and regulators of your internal controls.

3. Statement of Functional Expenses – Part IX

Here, expenses are broken down into categories such as salaries, professional services, and program vs. administrative costs. Donors and grantmakers analyze these figures to assess how resources are allocated. Strong financial transparency can strengthen funding opportunities.

The Bottom Line

A thoughtful board review of Form 990 ensures accuracy, demonstrates accountability, and highlights your nonprofit’s impact. Don’t view the form as just a compliance task—treat it as a strategic communication tool that builds trust and supports fundraising success.

Next Step: Contact your Whittlesey Advisor for expert guidance on maximizing the value of your Form 990.

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