How to Read a Nonprofit's Form 990: A Complete Guide

IRS Form 990 is the most important document in nonprofit transparency. Filed annually by most tax-exempt organizations, it's a comprehensive financial disclosure that reveals everything from total revenue and executive salaries to board composition and potential conflicts of interest. Yet most donors, journalists, and even nonprofit professionals don't know how to read one effectively. Here's your section-by-section guide.

Which Version? 990, 990-EZ, and 990-PF

There are actually several versions of the form:

• Form 990: The full version, required for organizations with gross receipts ≥ $200,000 or total assets ≥ $500,000. This is the most informative filing.
• Form 990-EZ: A simplified version for organizations with gross receipts < $200,000 and total assets < $500,000. Contains less detail.
• Form 990-N (e-Postcard): The simplest filing for organizations with gross receipts ≤ $50,000. Contains almost no financial detail — just confirmation the organization still exists.
• Form 990-PF: Filed by private foundations (like the Gates Foundation or Ford Foundation). Contains unique information about grants made and investment portfolios.

Part I: Summary — The Executive Overview

Start here. Part I provides the organization's mission, total revenue, total expenses, net assets, and the number of employees and volunteers. Key numbers to note:

• Line 8: Contributions and grants — How much came from donations and grants
• Line 9: Program service revenue — How much came from fees for services
• Line 12: Total revenue — The big number. Compare across years for trends.
• Line 18: Total expenses — What the organization spent
• Line 19: Revenue less expenses — The surplus or deficit. Consistent large surpluses might indicate the organization is accumulating rather than spending on mission.
• Line 20: Total assets — Everything the organization owns
• Line 21: Total liabilities — Everything the organization owes
• Line 22: Net assets — Assets minus liabilities. This is the organization's "net worth."

Part VII: Compensation — Who Gets Paid What

This is often the most scrutinized section. Part VII lists officers, directors, trustees, key employees, and the five highest-compensated employees earning over $100,000. For each person, you'll see:

• Name and title
• Average hours per week
• Reportable compensation from the organization
• Reportable compensation from related organizations
• Estimated amount of other compensation (benefits, deferred comp)

When evaluating executive compensation, add all three compensation columns for the total package. Also check whether executives receive compensation from "related organizations" — this can sometimes obscure the full amount an executive earns from the nonprofit ecosystem.

Part VIII: Revenue — Where the Money Comes From

This section breaks down revenue in detail. Look for:

• Contributions vs. program revenue: A healthy organization typically has diversified revenue streams. Over-reliance on a single source is a risk factor.
• Investment income: Large amounts suggest the organization has significant endowment or reserve funds.
• Unrelated business income: Revenue from activities not related to the exempt purpose. If this is large, the organization may be operating more like a business than a charity.

Part IX: Expenses — The Functional Allocation

Expenses are divided into three columns: Program Services, Management & General, and Fundraising. This is where the often-criticized "overhead ratio" comes from. Key things to look for:

• Program expense percentage: Total program expenses ÷ total expenses. Most nonprofits report 70-85%.
• Compensation as % of total expenses: Lines 5-10 show total compensation costs. In service-heavy organizations, this can be 50-70% of total expenses.
• Grants and allocations (Line 1): For foundations and grantmaking organizations, this shows how much was distributed to other nonprofits.

Part X: Balance Sheet — Financial Position

The balance sheet shows what the organization owns and owes at year-end. Key items:

• Cash and savings: How much liquid cash is available
• Investments: Securities, land, buildings held as investments
• Total assets vs. total liabilities: A healthy ratio indicates financial stability
• Net assets: Divided into "without donor restrictions" (the organization can use freely) and "with donor restrictions" (earmarked for specific purposes)

The Schedules — Where the Details Hide

The most revealing information often appears in the schedules attached to the main form:

• Schedule A: Public charity status — confirms the organization's classification
• Schedule B: Schedule of Contributors — lists major donors (not public for most organizations, but the IRS sees it)
• Schedule D: Supplemental Financial Statements — details on endowments, land, buildings
• Schedule J: Compensation Information — detailed executive compensation including bonuses, deferred compensation, and perks like first-class travel
• Schedule L: Transactions with Interested Persons — loans to officers, grants to related parties. This is where potential conflicts of interest appear.
• Schedule O: Supplemental Information — narrative explanations of items on the main form
• Schedule R: Related Organizations — shows the web of affiliated entities

Five Things to Check First

If you only have five minutes with a Form 990, check these:

1. Revenue trend: Compare total revenue (Part I, Line 12) across 2-3 years. Growing, stable, or declining?
2. Surplus/deficit: Is the organization consistently running surpluses or deficits? (Part I, Line 19)
3. CEO compensation: What does the top officer earn relative to the organization's budget? (Part VII)
4. Schedule L transactions: Any loans to officers or transactions with insiders?
5. Net assets: Does the organization have healthy reserves? (Part X)

All of this information is available for every nonprofit in the GiveScope database. We extract and analyze Form 990 data to create financial health scores and comprehensive profiles — so you can get the key insights without reading 50+ pages of tax filings yourself.