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From the President's Office, September 2009

Dear Friend:

We're just starting to see the new and expanded IRS Forms 990 for 2008 trickling in to GuideStar. As of the end of August, we have about 30,000 now available on our free Web site.

We expect new 990s will come in at a slower pace than usual this year. We are hearing frequent reports from auditing firms and nonprofit organizations that this first-year effort at completing the new Form 990 has been difficult, very expensive, and time-consuming for most. It also appears likely that more nonprofits than usual will be requesting extensions this year in order to have more time to work through the details.

As you know, GuideStar's position on the Form 990 has evolved over the years. We like the 990 because all organizations of a certain size are required to file it—under penalty of law–and it is a public document. That helps promote transparency and accountability and gives the general public a chance to learn about nonprofit practice. But we also find some 990 data inaccurate or hard to understand, not timely, and not always as comprehensive as we would like. That's not necessarily the fault of the IRS; there's only so much you can do with one document to cover the diversity of the entire nonprofit sector.

More important, we think your organization is best understood by reviewing it from a variety of data points. It's important to encourage your stakeholders to go beyond the 990. That's why we have a full-court press underway to make the GuideStar Exchange the place for you to provide a variety of useful documents and pieces of information—your annual reports, videos, audited financial statements, and whatever you think will be helpful. That's also why we have added third-party reviews through GreatNonprofits to give donors, volunteers, and program recipients a chance to share their thoughts about your organization. And soon we'll have even more.

Despite its limitations, however, the 990 plays a useful role, and the new version has some important improvements as well as new requirements. Most likely to draw attention are the questions about compensation and the process for determining it. In fact, we think these questions are so challenging, we've created a new service for helping you answer them. We think the new questions on governance will be equally challenging in the first year for nonprofits to complete.

In the end, assume that your organization's 990 will get wide and public inspection, so it needs to be as good as you can make it. But don't allow your stakeholders to assume that your 990 is the only way to evaluate your organization, or even the best way. You have an exciting story to tell—don't be shy in telling it and sharing it with GuideStar.

Sincerely,

Bob Ottenhoff
President and CEO

Topics: IRS Form 990