Overview
The not-for-profit (NFP) organization that was selected for analysis is the Autism Society of America. The Autism Society of America (ASA) is a national charitable organization that was founded in 1965 by Bernard Rimland and Ivar Lovaas, together with other parents of children with autism (The ASA, n.d). The ASA's head office is located in Bethesda, Maryland. The organization is dedicated to improving the lives of all affected by autism. This includes the lives of individuals on the autism spectrum, their family, and the professionals, such as caregivers, educators, medical professionals, legislators, and other professionals who work with them. The ASA provides current, reliable information about autism. It serves individuals impacted by autism through its strategic plan, which covers the following areas "advocacy, education, information and referral, support, and community" (The ASA, n.d).
The organization has been improving the lives of children and other people living autism together with their families for over five decades. The mission of the ASA is to improve the lives of all affected by autism. The ASA envisions a world where individuals on the autism spectrum, together with their families, are able to maximize their quality of life. In addition, the ASA envisions a world where individuals and families living with autism are treated with the highest level of dignity. The practices of the organization are governed by the ASA's Panel of Professional Advisors (PPA). The ASA's Advisory Panel of People helps the ASA staff create programs and services that will advocate for the right of all individuals with autism, their families, and professionals to live fulfilling independent lives.
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Focus and Intentions of IRS Form 990
NFP organizations, including charitable organizations, are exempted from paying federal taxes. However, these organizations are required to file a form with the Internal Revenue Service (IRS) (Fritz, 2020). That form is called IRS Form 990. NFP organizations are required to file IRS Form 990 to make sure that they report their activities. This helps ascertain if their business is consistent with their public responsibilities. The IRS Form 990, which ought to be made public, provides an easy way for donors, organizations, agencies, and other people intending to support a certain cause to locate and evaluate the best charity to support (Fritz, 2020).
Organizations filling IRS Form 990 often clarify their mission and also detail their accomplishments of the previous year. The form provides valuable information, including where the NFP organization gets its revenue, how sustainable the organization is, how the organization pays its employees, and how the organization's cash reserves look like (Fritz, 2020). IRS Form 990 is intended to give the government and the public, including donors, potential employees, and prospective board members, a picture of the organization's activities every year. Presumably, donors intending to support a particular cause base their decisions on information provided in the form.
It is vital to note that not all NFP organizations have to file IRS Form 990. There are other organizations that are exempt from filing IRS Form 990. The following organizations ought to file IRS Form 990: (I) all private foundations, (II) NFP organization with gross receipts of $200,000 or assets worth $500,000, (III) larger NFP organizations with gross receipts exceeding $500,000, and (IV) small NFP organization with gross receipts of $50,000 or less have to file IRS Form 990 (Fritz, 2020). Churches and most faith-based organizations (religious schools and missionary organizations), state institutions (universities), and government corporations are some of the organizations that exempt from filing IRS Form 990. Religious, charitable, and educational organizations fall under Section 501 (c) (3) of the U.S. tax code and are exempted from paying federal taxes (Weltman, 2019). Other organizations that exempt from filling the form are that are highlighted under Sections 501(c), 527, 0r 4947(a) (1) of the U.S. tax code, and do not fall into the exemptions listed above (Weltman, 2019).
Basically, IRS Form 990 serves as a tax compliance tool for an organization exempted from paying federal taxes. In addition to being a tax compliance tool, IRS Form 990 ensures that reporting procedures and bookkeeping for NFP organizations are standardized and transparent. This helps ensure that the organization follows best practices for corporate governance. In addition, it helps remove any negative perception that the public or any individual, including donors and the government, may have of an organization's financial responsibility.
Intended Users of IRS Form 990
The primary intended audience of the IRS Form 990 is no longer solely the IRS but also the general public, including donors or creditors, board members, members of the NFP organization (Fritz, 2020). NFP organizations, including charitable organizations, ought to file Form 990 each year with the IRS. The IRS evaluates NFP organizations by just examining their 990s. Through this, the IRS ensures that the information provided on the form is reported accurately and correctly. The general public is also concerned with the annual reporting of the NFP organization's financial information. It is for this reason that the forms are made public to provide an easy way for the general public to evaluate the forms. By examining the form, a donor can find out where the NFP organization gets its revenues. The donor can also express his interest in the organization as well as evaluate how the organization utilizes funds by examining its IRS Form 990. Presumably, donors base their gifting decision on the information they obtain from the form. In other words, the IRS Form 990 provides an easy way for donors or contributors interested in supporting a particular cause to find and evaluate the best charities to support. Donors who have already contributed to the organization can use the form to evaluate if the funds they contributed was used wisely by the organization.
A potential employee can also examine the form to understand how well the NFP organization pays its top employees. In addition, prospective board members are also intended users of IRS Form 990. By examining the IRS Form 990 of an organization, a prospective board member can see the organization's existing board members and what the charity's cash reserve looks like. Anyone researching NFP organization can find all of that information and more by examining the organization's IRS Form 990.
Due to recent revisions, IRS Form 990 collects numerous other information, including information on "the disclosure of potential conflicts of interests, compensation of board members and staff, and other details having to do with financial accountability and avoidance of fraud" (Fritz, 2020, par. 7). Based on the revisions made, other government agencies use the IRS Form 990 of NFP organizations to determine if indicators of fraud exist with the organization.
Citizen-Centric Report
A Citizen-Centric Report (CCR) is a report that presents the financial information of an agency in a way that is clear and understandable (The AGA, n.d). This helps ensure maximum transparency to the intended users. CCR is primarily addressed to the general public, specifically the citizens and taxpayers. Other intended users of a CCR include public officials, creditors, business owners, board members, and any readers of the Comprehensive Annual Financial Report (CAFR).
The Association of Government Accountants (AGA) is a NFP organization of financial professions in the United States (The AGA, n.d). The AGA came up with CCR to foster innovative means of communication between governments and the general public. AGA recommends governments to provide their citizens with concise, informative, and easy to understand governmental financial information (The AGA, n.d). According to AGA, citizens have the right to government financial information. The CCR detailed government finances in a four-page document. CCRs make governments more accountable to their citizens. According to AGA, CCRs helps U.S. citizens become better educated as well as be able to participate in government activities.
Comparisons between IRS Form 990 and CCR
There are a number of similarities, as well as a number of differences between IRS Form 990 and CCR. The first similarity is that one of their primary intended users is the general public. Secondly, both reports are required by or supported by an authoritative body to be made public. For example, the IRS requires NFP organizations to file their IRS Form 990 with IRS and make them public. On the other hand, CCRs are supported by the AGA, which encourages the government to provide financial information to its citizens. Thirdly, both reports are used for financial information purposes. IRS Form 990 presents financial information for NFP organizations, whereas a CCR is a snapshot version of an entity's CAFR. The main difference between the two reports is that IRS Form 990 is a long document and contains many sections while the CCR is usually four pages long.
The ASA's IRS Form 990
The ASA' IRS Form 990 is for the 2019 calendar year (tax year beginning January 1, 2018, and ending December 31, 2018). The ASA is exempted from paying federal taxes because it falls under Section 501(c) (3) of the U.S. tax code. 501 (c) (3) tax exemptions applies (IRS Form 990, 2019). The ASA is a charitable organization and falls within section 501 (c) (3), and thus, is exempted from paying taxes. The ASA's IRS Form 990 contains various parts (Part I to Part X). Part I (summary) of the form provides a summary of the organization and its governance. The section also contains the organization revenue for the previous year and current year, the organization's expenses, and its net assets or fund balances.
Part I of the ASA's IRS Form 990 clearly state the mission of the organization, which is to improve the lives of all affected by autism. The organization is continuing to provide support to individuals, families, and professionals on the autism spectrum. As stated in the form, the organization has 25 voting members and 25 independent members of the governing body (IRS Form 990, 2019). With regard to revenue, the ASA generated a total revenue of $2,424,647 and $2,986,102 in the previous year and current year, respectively (IRS Form 990, 2019). The organization's total expenses were $2,487,881 and $2,820,429 in the previous year and current year, respectively (IRS Form 990, 2019). The ASA's revenue less expenses were -$63,234 in the previous year and $165,673 in the current year. The organization had assets worth $978,063 and $833,569 at the begging of the current and end year, respectively (IRS Form 990, 2019). The total liabilities at the begging and end of the current year were $508,876 and 196,709, respectively (IRS Form 990, 2019). Net assets were $469,167 and $634,860 at the beginning and end of the current year, respectively.
Part II of the IRS Form 990 is the signature. In this part, an officer attests under penalty of perjury that the information provided in the form is true, correct, and complete. This part was completed by Scott Badesch, the Chief Executive Officer (CEO) of the ASA (IRS Form 990, 2019). Part III of the form outline the organization's accomplishments. Other components included in this section are the organization's mission statement, and expenses and revenues associated with the organization's three largest program services. The ASA "envisions individuals and families living with autism are able to maximize their quality of life, are treated with the highest level of dignity, and live in a society in which their talents and skills are appreciated and valued" (IRS Form 990, 2019). The organization's total program service expenses totaled $2,234,254.
Part IV, V, VI, VII, VIII, IX, and X contain a checklist of required schedules, statement regarding other IRS filings and tax compliance, governance, management and disclosure, and compensation of officers, trustees, key employees, and highest compensated employees, statement of revenue, and statement of functional expenses, balance sheet, reconciliation of net assets, and financial statements of reporting, respectively. The ASA's IRS Form 990 satisfy the financial needs of its intended users. By examining the organization's IRS Form 990, one can be able to tell the financial health of the NFP organization. The individual can then make a decision on whether the organization is conducting business in a manner that is consistent with its public responsibility.
References
Fritz, J. (2020). What nonprofits need to know about IRS Form 990. [Online]. Retrieved April 22, from https://www.thebalancesmb.com/what-nonprofits-need-to-know-about-form-990-2502284
IRS Form 990. (2019). Return of organization exempt from income tax. [Online]. Retrieved April 22, 2020, from https://pdf.guidestar.org/PDF_Images/2018/521/020/2018-521020149-1131fe7a-9.pdf
The Association of Government Accountants. (n.d). Citizen-Centric Reporting (CCR). [Online]. Retrieved April 22, 2020, from https://www.agacgfm.org/citizen/
The Autism Society of America. (n.d). About the Autism Society. [Online]. Retrieved April 22, 2020, from https://www.autism-society.org/about-the-autism-society/
Weltman, B. (2019). The purpose of IRS Form 990. [Online]. Retrieved April 22, 2020, from https://www.investopedia.com/articles/personal-finance/083115/purpose-irs-form-990.asp
