Form 990 or 990-EZ - Schedule N is an important document that certain nonprofit organizations in the United States are required to file with the Internal Revenue Service (IRS). It serves a specific purpose and provides essential information regarding a nonprofit's continuation or termination of its existence, or any changes in its structure, mission, or activities. Let's delve into the purpose of Form 990 or 990-EZ - Schedule N and its significance for nonprofit organizations.
1. Reporting significant changes: The primary purpose of Form 990 or 990-EZ - Schedule N is to report significant changes within a nonprofit organization, particularly changes related to its mission, programs, governance, or structure. It enables nonprofits to disclose vital information that allows the IRS and other stakeholders to stay informed about any modifications in the organization's operations.
2. Continuation or termination of existence: Schedule N is particularly essential for nonprofits that are undergoing significant structural changes such as merger, consolidation, or dissolution. It requires organizations to provide details regarding these changes, including the effective date and the resulting successor organization, if applicable.
3. Activities conducted abroad: Nonprofits engaged in international activities must use Schedule N to furnish information about their activities outside the United States. It helps in evaluating whether the organization complies with the necessary regulations for international operations, including the provision of aid or services abroad.
4. Noncash contributions and other expenses: Schedule N also requires nonprofits to report noncash contributions received and further distributed by the organization. This section helps the IRS and other stakeholders to understand the flow of noncash assets or services in and out of the organization, ensuring transparency and compliance.
5. Program services or political activities: Nonprofits must disclose whether or not they conducted certain program services or engaged in political activities during the tax year. If applicable, Schedule N allows organizations to provide detailed descriptions of such activities, including expenses and other pertinent information.
6. Governance and management changes: This section of Schedule N enables nonprofits to report any significant changes to their governing bodies, such as directors, officers, trustees, or other key individuals. Additionally, the form ensures the disclosure of any management company or fundraising consultant engaged by the organization.
7. Public support and revenue: Schedule N requires nonprofits to disclose details related to their public support and revenue. It helps the IRS assess the organization's financial health, its sources of support, and whether it meets the criteria for tax-exempt status.
In conclusion, Form 990 or 990-EZ - Schedule N serves a crucial purpose for nonprofit organizations. It helps them report significant changes, disclose international activities and noncash contributions, describe program services or political activities, report changes in governance, and provide information about public support and revenue. By filling out Schedule N accurately and completely, nonprofits demonstrate transparency, ensure compliance with IRS regulations, and maintain public trust.