December 15, 2025

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If you are in nonprofit leadership, it is likely you have heard of the IRS Form 990. This is the federal tax filing that most nonprofits that have 501(c)(3) status must file each year. The form itself can get quite long: including the necessary attachments, called “schedules,” your completed Form 990 can easily be over 30-40 pages long. Because of its length and the varied information required, the Form 990 can seem quite intimidating. While some organizations will delegate the completion of the Form 990 to an accountant or attorney, other organizations may complete the Form 990 internally, without professional assistance.

The Form 990 is a necessary part of the life and compliance of a faith-based nonprofit, because filing the Form 990 annually is a requirement for your organization to maintain its federal 501(c)(3) nonprofit status. But it also doesn’t need to be so intimidating! Taking something long and seemingly complicated and breaking it down into understandable parts can help make the document and the process more accessible and less frightening. So here are five things you should know about the Form 990 to help get you started.  

Before diving into this post, you may want to become acquainted with the Form 990 itself. The Form 990 document can be found here and the instructions can be found here.  

Now let’s break down some of the basics about the Form 990. Hopefully this will help you better understand the document and its various parts, as well as collect some important tips for completing the document and protecting your organization.

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1. How revenue is distinguished

One of the main types of information the IRS gathers through your Form 990 is the amount and type of revenue your organization receives. This is not just about determining how much money your organization received during the year. The organization’s revenue needs to be broken down into certain categories.

The Form 990 (Part I and Part VIII) breaks down type of revenue into contributions, gifts, and grants, program service revenue, and “other revenue.”  

The first category consists of all the donations your organization has received, whether from individual donors, government grants, grants from foundations or other nonprofits, or any other donor source. Note that some organizations have to file a Schedule B with their Form 990, which lists the organization’s major donors.

The second category states how much revenue your organization has received from its own programs. This could be income from users of a subscription database your organization maintains, tuition for courses offered, or any service your organization offers for a fee that is related to its mission.

The final category includes everything that doesn’t fit the other categories. “Other revenue” might include interest from the organization’s investments, rental income, or proceeds from the sale of assets.

Categorizing your organization’s revenue is necessary for completing the Form 990, but it is also a useful exercise. By determining where the organization’s income is coming from, you can see what activities generate the most revenue and use that information to help prioritize your fundraising efforts.

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2. How expenses are distinguished

Another important piece of information the IRS gathers from the Form 990 is your organization’s expenses. These parts of the Form 990 (Parts I and IX) breaks down what the organization spends its money on. You can find the comprehensive list of expense types in Part IX of the Form 990, but some of the main categories include compensation of officers, directors, trustees, and employees, benefits, professional fees (such as legal and accounting expenses), advertising, travel, taxes, and insurance. There is also a line for “other expenses” to include events or other purchases/services that may not be specified in the form.  

Analyzing and better understanding your organization’s expenses is a useful exercise. This can help you see the big picture of where your organization is spending money. From here, you can evaluate where your most important expenses are, as well as where you may be able to cut costs. Of course, the purpose of this process is complying with the IRS Form 990 requirement to maintain your 501(c)(3) status. But you might as well use the process to improve your organization, since you are required to complete the Form 990 anyway!

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3. The importance of properly articulating your purpose, mission, and activities

There are places in the Form 990 where your organization must include a description of its mission or activities. In Part I, there is a brief description of the organization’s most significant activities. In Part III, there is a brief description of the organization’s mission. These are important, both to confirm that the organization’s activities and mission remain within the exempt purposes of 501(c)(3) and to ensure that your organization is staying true to its mission.

Note that the Form 990 (Part III, Question 2) asks whether the organization has offered any significant program services that were not included in previous Form 990 filings. If your organization has started a new program or expanded its work to include new activities, you should describe the new activities on Schedule O. Schedule O is where an organization has the opportunity to provide supplemental information. This is a good opportunity to keep track of new activities and ensure they are aligned with and in support of the organization’s central purpose and mission.  

Crafting a description of your organization’s mission and activities is a good opportunity to recall the tax-exempt purpose(s) for which your organization exists. To obtain and maintain federal 501(c)(3) status, an organization must be organized exclusively for “charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.”  

Your organization’s initial documents (often called Articles of Incorporation) should state your exempt purposes: for example, a Christian school may be organized for both religious and educational purposes. Make sure that your description of your organization’s mission and activities in the Form 990 emphasizes and reflects your exempt purpose(s). If your short description of the organization’s mission or activities no longer fits with the exempt purpose(s) for which the organization was formed, perhaps it is a good opportunity to reflect and ensure that your organization returns to its core purpose and has not drifted too far from its central mission.

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4. Keep a redacted version of your Form 990 in your files for public inspection

Unlike personal tax returns, your organization’s Form 990 is actually a publicly available document. The IRS makes clear that nonprofits must make the Form 990 (for the three most recent years) available for public inspection upon request. It is also clear, however, that this public disclosure requirement does not require most exempt organizations to disclose the names and addresses of their donors.

Not only is disclosure of your donors generally not required by law, but it is something you want to be very careful to avoid. Many donors want their names and addresses private for good and obvious reasons. So, it is crucial that you take steps to protect their identities. There is a very simple and practical step you can take to do this.

When you file your Form 990 with the IRS (which, as stated above, likely includes a Schedule B with the names and addresses of your donors), immediately make a redacted copy where confidential or sensitive information is completely removed. Make sure all reference to donor names and addresses is removed on the redacted version.

Next, take the redacted copy and save it in your organization’s files where it is clearly marked as the Form 990 available for public inspection.  

Then, take the original unredacted version of the Form 990, label it “CONFIDENTIAL - NOT FOR PUBLIC INSPECTION!” and remove it from the organization’s shared folder. It might be best to keep it somewhere safe, like on a separate flash drive or a key employee’s individual hard drive. That way, the unredacted version will not be easily available to staff and is therefore less likely to be accidentally disclosed to the public.

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5. If you don’t understand parts of the Form 990, make a list and ask a professional

When you perform your initial review of the Form 990, some parts will be intuitive and make sense to you. It might take a little bit of work, but you should be able to calculate your organization’s revenue and expenses, as well as draft a short statement about its mission and activities.

But other parts of the Form 990 are not as intuitive. In particular, Parts IV, V, and VI of the Form 990 consist of dozens of “yes” or “no” questions. Some of these questions may have obvious answers: if your organization received any payments for indoor tanning services (yes, this is a real question! See Part V, question 14), you would probably know about it! But many of the questions may not be so easy. When making your initial attempt to draft the Form 990, do what you can, make notes about what you do not understand, and then ask an attorney or an accountant who has worked with nonprofit organizations.

The process of going through the Form 990 on your own first will make the process of speaking with an attorney or accountant much quicker, easier, and less expensive. If you simply came to a professional and asked for help completing the Form 990, it would likely take many hours and cost quite a bit. But if you go through the Form 990 on your own, complete what you can, and come to the attorney or accountant with a draft Form 990 and specific questions, your time with the attorney or accountant should be a quick, efficient process to fill in what you could not complete by yourself.

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Conclusion

The IRS Form 990 is not optional; your organization needs to file it annually to retain your 501(c)(3) status. Falling behind can lead to penalties, including your organization automatically losing its federal income tax exemption. It can be a long and complicated document, but by starting to break down the parts and purposes of the Form 990, you can start to gain a better understanding of it. By collecting information about your organization’s revenue, expenses, and mission statement for the Form 990, you can go a long way toward assembling the materials needed to prepare and file your Form 990. In the process, you will also gain a valuable understanding of your organization’s operations.  

By understanding the public availability requirements, redacting your Form 990, and keeping the unredacted version out of publicly shared computers, you can protect your organization from accidentally disclosing donor identities.  

A word of caution before concluding: while it may be tempting to save money by filing the Form 990 without professional assistance, the Form 990 is a complicated tax document. It is important that it be completed properly and thoroughly to protect your organization and keep it in compliance. Napa Legal strongly encourages faith-based nonprofits to consult with and engage a tax professional when preparing to file the Form 990. But by reviewing the Form 990 and Napa Legal’s resources yourself, you can start the process, collect needed materials, and “know what you don’t know” so that you can use your attorney or accountant’s time efficiently.  

To learn more about the Form 990, check out Napa Legal’s companion resource: Answering Your Questions About the Internal Revenue Service’s Form 990.

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