New IRS form presents challenges for nonprofits and lawyers

Long Island Business News, Oct 10, 2008 by Dan Heilman

"The IRS and the giving public want a way of determining that dollars and other resources given for tax-exempt purposes are used for those purposes, and not in a way that excessively benefits insiders," Mason said. "When prospective donors see nonprofits buying jet airplanes for staff members, resistance increases for all nonprofits."

He added, however, the increased reporting requirements, although burdensome in the short run, could pay dividends later.

"There is no doubt that the new 990 creates additional disclosure requirements for nonprofits," Mason said. "The additional disclosure generates additional expense for the nonprofit organization in auditing expense and maintenance of other financial controls.

"On the other hand, greater disclosure can give additional confidence to prospective donors, large and small, sophisticated and unsophisticated," he continued. "Anything that reduces donor concern about the nonprofit's use of funds also reduces donor resistance."

This story appeared in sister publication Minnesota Lawyer.