Every day we hear questions and comments about IRS Form 990 from novices and sophisticated users alike. Following are some misperceptions we encounter.
It's a presidential election year, and with presidential politics comes increased scrutiny of nonprofits' lobbying and advocacy efforts. Unless they are careful, 501(c)(3) public charities that engage in political activities could find themselves endangering their tax-exempt status.
Based on actual conversations with GuideStar employees:
"I need to change my nonprofit's address, but your system won't let me," the caller states.
"Does your organization participate in GuideStar?" a GuideStar staff member inquires.
"Oh, yes, we're on your site, and you've got our 990 and everything."
"But has someone registered your organization with us and completed the GuideStar Information Form?"
"Huh?"
About Ratios in General
We've all heard stories about financial abuses at specific charities—concern about nonprofit wrongdoing has even drawn Congressional attention. Some donors and charity watchdogs advocate using financial ratios to evaluate charities and ferret out the ones that are using their funds inappropriately. These groups and individuals argue that any organization whose ratios fall below certain levels should be regarded with suspicion.
