Caution Ahead? Changes May be Coming to the Form 990

Nonprofit organizations have long known that the IRS Form 990 is more than just a tax filing. It is a public document that funders, donors, watchdog organizations, journalists, and community partners often review to better understand an organization’s governance, financial stewardship, and mission impact. Now, proposed changes signaled by the U.S. Department of the Treasury and the IRS could make the Form 990 even more important.

What does this mean for your organization and other nonprofits? At this stage, no immediate action is required, and nonprofit organizations are not yet facing new filing obligations. Proposed regulations are expected later this year and will likely include an opportunity for public comment before changes are finalized. 

Here’s what’s important to know:

Not a total surprise
As alarming as this news may seem, it’s not entirely “new” news. In many ways, the anticipated changes reinforce trends nonprofits have already been experiencing for years, including growing expectations around transparency, documentation, governance, and financial accountability. 

There’s a silver lining
Increased transparency is not all bad! Your donors and grantmakers genuinely want to understand not only where funds come from, but also how decisions are made and how dollars ultimately support mission-related work. Increased understanding among your key stakeholders is an excellent opportunity to foster deeper engagement.

Effects would be varied
Some organizations will be more affected than others. If your nonprofit receives public funding or participates in fiscal sponsorship arrangements, the proposed revisions could mean you’ll be subject to more detailed disclosures and recordkeeping requirements. 

Focus on specific functions
Certain areas of nonprofit reporting may be particularly important. Treasury officials have specifically indicated interest in clearer reporting around who controls funds, how grants are administered, and how sponsored projects operate within larger charitable structures.
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Importantly, none of this means that you should panic. Many organizations already have strong internal controls and reporting systems in place. Instead, this is an opportunity to take a few key steps right now:

• Review internal financial reporting and documentation procedures.
• Confirm that board minutes and governance policies are current and organized.
• Evaluate how grants, contracts, and restricted funds are tracked internally.
• Work closely with accountants, auditors, and legal counsel to stay informed as proposed rules develop.

Above all, remember that the Form 990 is a public-facing storytelling tool, not simply a compliance form. While Form 990 reporting can sometimes feel technical or burdensome, it also gives nonprofits an opportunity to communicate impact, stewardship, and organizational integrity. Strong governance and transparent reporting can strengthen credibility with funders and the broader community alike.
If you’d like to discuss how the Form 990 creates engagement and communications opportunities, please reach out! The team at the Community Foundation is always happy to serve as a resource and sounding board for our nonprofit partners. Thank you for all you do to make our community stronger! ​