Non-profit – or NPO or Not-for-Profit (or charity) – organizations are institutions or foundations that dedicate their efforts to and advocate for a particular social cause. According to recent figures there are over a million and a half registered NPOs in the United States and contributions totaled nearly $360 billion. Non-profits are usually registered with the federal government as 501(c)(3) organizations. The IRS actually provides 26 legal definitions for the term ‘non-profit’!

There are differences in not-for-profit and non-profit organizations despite the fact the two terms are often used interchangeably. One distinction in not-for-profit vs. non-profit may be membership. Non-profits will often have employees that get paid a salary, but that salary is not contingent on the fundraising efforts of that company. There may also be volunteers at the non-profit, but they fail to benefit from the income of the company.

Non-profits may either be partially or fully tax exempt. However, that does not mean they do not have to file taxes. In fact, although NPOs face a variety of challenges such as fundraising, the greatest obstacle they may face is tax preparation due to the many expectations placed on these organizations to remain in tax-exempt status. There are several tax return forms that an NPO must complete such as a 990, 990EZ or 990-PF (the latter is for a private foundation).

Specifically, the tax returns that must be accessible for public consumption include

  • Form 990, Return of Organization Exempt From Income Tax (PDF)
  • Form 990-EZ, Short Form Return of Organization Exempt From Income Tax (PDF)
  • Form 990-PF, Return of Private Foundation (PDF)
  • Form 990-BL Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons (PDF)
  • Form 1065, U.S. Partnership Return of Income (PDF)

According to the IRS website the following information is also relevant:

  • A 501(c)(3) organization must make available for public inspection Form 990-T, Exempt Organization Business Income Tax Return (PDF), filed after August 17, 2006 and these returns must be available for a three-year period.

ORT Consulting is expert in reporting and tax preparation for NPOs. Please feel free to contact us with any questions you may have.