Christian Leadership Alliance
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Insights for Financial Managers
Understanding changes that will affect your ministry.| Outcomes, Oct/Nov 2008
The IRS suggests the new Form 990 is consistent with the agency's "guiding principles of transparency, compliance, and burden minimization." Ministry financial managers will struggle to accept the phrase "burden minimization" as an accurate reflection of the new Form 990.
Here are a few of the key Form 990 challenges financial managers face:
Chart of accounts. The ease with which you translate the data from your chart of accounts to Form 990 has always been important. Since the new form's format will likely not change for several years, now is an excellent time to review your chart of accounts to better correlate the data to Form 990. Completing the new form is enough of a challenge without also struggling with significant data translation.
Gift-in-kind data. If gifts-in-kind (GIK) are insignificant for your ministry, the new Schedule M will have little impact. But where GIK are significant, recording GIK in 24 different categories may be challenging.
Managing the 990 process. Even for small ministries, completing Form 990 has never been enjoyable for financial managers. Now, with a core form and up to 16 schedules, the process is much more formidable. Many large ministries will need to complete at least 10 of the schedules.
Collecting the data. Particularly for larger ministries, responsibility for collecting the data should be assigned to a particular staff member. With the old form, collecting the data often began after year's end. With all of the new questions on the new form, data-collection activities should occur throughout the year. Having a point person for this process will be helpful.
Preparation of the form. I am surprised by how many Form 990s are completed by ministry staff. With the new form, an early decision is, "Who will prepare the form?" I predict that many more external professionals will be preparing the forms than before. However, while some of the data is available from the annual audit, ministry staff will need to collect most of the new information required by the form. So whether you prepare the form internally or ask an external professional to handle the preparation, the complexity of the new form likely requires that a tax attorney review it.
The bottom line. Preparing the new Form 990 will cost nearly every ministry significantly more than before. Even if the new form is prepared internally, staff time (and with it, costs) will increase. If outside professionals are used, the costs will undoubtedly increase significantly. And the additional cost for this "burden minimization" is primarily overhead expense, not program!
Dan Busby, CPA, is the acting president of the Evangelical Council for Financial Accountability (ecfa.org).
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