Nonprofit Tax and Audit Services

990’s are due on the 15th day of the 5th month after your year-end. A 6-month extension is available if requested, allowing you almost the entire following year to get your 990 filed.

Generally tax-exempt organizations with less than $50,000 in gross receipts can file the 990N, a simple annual online filing requiring minimal information from the organization. Organizations with $50,000 to $200,000 of gross receipts and less than $500,000 of assets can generally file the IRS Form 990EZ, which as its name implies, is easier than the long-form 990. Organizations not meeting either of those filing thresholds should file the regular long-form IRS 990.

A program ratio is one of the top things potential donors/funders are looking at when evaluating an organization. It tells how much a nonprofit is spending on its programs/mission versus on fundraising or general and administrative costs. A good benchmark is the Charities Review Council’s Accountability Standards which have the optimal range at 70% to 90%. It makes sense you wouldn’t want too low of a ratio, otherwise it could be a sign the organization isn’t spending its money wisely. However, some feel too high of a ratio can also be a concern as not spending enough on administrative costs or continued fundraising could affect the sustainability of the organization. Or perhaps an unrealistically high ratio could signify inaccurate or aggressive allocation methods of indirect costs. A nonprofit with a program ratio outside of this range doesn’t automatically make it a non-worthy organization. Sometimes small nonprofits end up with a lower program ratio as their overall budget is much smaller and they need a certain level of fundraising and general and administrative costs which can get diluted more against total expenses in a nonprofit with a larger overall budget. An organization with a high number of volunteers doing their administrative duties or running their fundraisers can sometimes have a higher program ratio since they wouldn’t generally record that volunteer time as expenses.

This really depends on the specifics of your organization. Some organizations feel 60-90 days of their operating budget is adequate, while others prefer to have 6 months or even more in reserves. One of the main variables is how regular or certain your revenues are. If you have a lot of earned revenue such as membership dues or fees for services, you might be comfortable with a lower level of reserves. On the other hand, if you’re fairly reliant on contributions, a higher level of reserves may be in order. Also, consider the seasonality or cyclical flow of your operations. Some organizations spend the majority of their annual budget in a condensed period of the year and therefore, they need build up reserves each year before heading into their busy time.