Education
Understanding IRS Form 990: A Donor's Guide
What IRS Form 990 is, what information it contains, and how to use it to evaluate nonprofits.
What is Form 990?
IRS Form 990 is an annual tax return that tax-exempt organizations must file. It's a public document — anyone can access it. This transparency is one of the conditions of tax-exempt status.
Who Files Form 990?
- Form 990: Organizations with gross receipts ≥ $200K OR total assets ≥ $500K
- Form 990-EZ: Organizations with gross receipts < $200K AND total assets < $500K
- Form 990-N (e-Postcard): Organizations with gross receipts ≤ $50K
CharityScored uses data from the full Form 990, covering approximately 340,000 larger organizations.
Key Information in Form 990
Revenue & Expenses (Part I) - Total revenue, contributions, program service revenue - Total expenses broken into functional categories - Net assets at beginning and end of year
Program Accomplishments (Part III) - Description of the organization's three largest programs - Expenses and revenue for each program - This is where you learn what they actually do
Compensation (Part VII) - Officers, directors, trustees, and key employees - Their compensation from the organization and related entities - Hours per week devoted to the position
Financial Statements (Part X) - Balance sheet: assets, liabilities, net assets - Provides a snapshot of financial health
How CharityScored Uses 990 Data
We extract key financial metrics and calculate a Trust Score based on:
- Program spending ratio — Functional expenses going to programs vs. overhead
- Executive compensation — Officer pay relative to organizational size
- Revenue stability — Size as a proxy for sustainability
- Filing recency — How current their data is
- Asset strength — Financial reserves and stability
Where to Find Original 990s
- ProPublica Nonprofit Explorer — Full PDFs
- IRS Tax Exempt Organization Search — Official source
- GuideStar (Candid) — Additional context
Limitations
Form 990 tells you about finances, not impact. It can't tell you:
- Whether programs are effective
- If the mission is being fulfilled
- How well the organization is managed day-to-day
- Whether donations are urgently needed