Why those checkboxes on the Form 990 are important
Understanding the importance of correctly filling out your organization's 990
At Charity Navigator, we rate charity performance across four key domains, which we call "beacons." These beacons are Impact & Measurement, Accountability & Finance, Leadership & Adaptability, and Culture & Community.
The Charity Navigator Accountability & Finance beacon is based primarily on data gleaned from the IRS Form 990. While most nonprofits know that the IRS Form 990 provides the financial metrics included in our ratings, they may be surprised to learn that the 990 is also the source of many of our accountability and governance metrics.
IRS Form 990 requires nonprofits to report if they have policies in place like a Whistleblower, Document Retention policy, or Conflict of Interest policy. It also asks about key governance practices such as the size and independence of its board or if the board keeps meeting minutes. Charity Navigator uses these fields to determine a nonprofit’s overall accountability score.
It is always best practice to have multiple staff members review the 990 after the accountant has finished it, but before it is filed with the IRS. In fact, this too is an item reported on the 990 that we look at (question 11a in part VI on the Form 990). Having these best practices in place but failing to report them on the 990 ends up looking the same in our ratings as not having them at all. If you do not yet have these policies, we strongly suggest you have your staff and board compile them. If you do have them in place already, be sure that this is accurately reported on the Form 990. The following are just a few of the policies that need to be reported to the IRS on the 990 and that are included in our rating:
Conflict of interest policy: Part I, Line J
Documents board meeting minutes: Part VI, question 8a
Whistleblower policy: Part VI, question 13
Document retention and destruction policy: Part VI, question 14
CEO Compensation process: Part VI, question 15a
If a mistake was made on your 990 in relation to these policies OR you have instituted them after you filed their last 990, please note that we cannot update the rating until we receive and process an amended or new 990 from the IRS. Sending us the policy directly or notifying us that you have it in place will not be sufficient. We must go by what is reported to the IRS on the Form 990.