July 1, 2007
"We commend the Internal Revenue Service on the landmark redesign draft of the Form 990, which properly offers charitable donors a wealth of new information on the financial, operational and governing practices of public charities. Following a 90 day comment period, the IRS expects a final revised version of the Form 990 to be completed by December 2007. Barring any unforeseen circumstances, the Service anticipates the new Form will be ready for use by the 2008 tax year (for returns filed in 2009).
In the redesigned draft, the IRS tears down the current Form, one that had been poorly cobbled together over time, and replaces it with an improved version comprised of an extensive core form and 15 supporting schedules. The redesigned form will give the general public comprehensive financial data to draw from before making charitable giving decisions.
We are particularly supportive of the effort by the IRS to require charities to report data and information which typically extends beyond the financial information which it would ordinarily seek in a tax return (i.e., financial efficiency ratios, Board relationships, implementation of key governing policies, etc.). Details such as these not only offer donors keen insight into the governing priorities and management capabilities of each organization but allow the IRS to "red-flag" potentially abusive situations.
We strongly urge the IRS not to back away from the changes it is proposing. In the event the IRS receives comments from charities and their advisors regarding the potential burden caused by the higher level of disclosure, it should be worth reminding all concerned that a key element in the original logic behind imposing fewer statutory restrictions upon publicly supported organizations (as compared to more highly regulated private foundations) was due in large part to the fact these charities were and continue to be subject to the public inspection requirement. Since donors have the opportunity to monitor the fiscal activity and financial health of charities, they are able to factor their level of satisfaction into whether or not to support a charity. Clearly, the redesigned Form 990 will give the public significantly more information with which to make giving decisions. With this in mind, it is difficult to argue that less information for donors is a preferred alternative."
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