The Form 990-PF serves two essential purposes. First, it provides information that helps government agencies (the IRS and state charity regulators) enforce the laws that govern nonprofits. For example, it helps government regulators learn whether groups have been spending their funds in a way that might cause them to lose their charitable and tax-exempt status. Second, the Form 990-PF provides a great deal of financial information about the filing organization’s financial condition, about its financial strength or weakness and about such things as the sources of its income and its mandate or funding interests.
While much can be found out by examining an organization’s Form 990-PF for one year, a great deal more can be learned from looking at its Form 990-PF for two or more years. For example, if an organization reports the receipt of a considerable amount of income for three years from a particular source, such as program service revenue, it may be considered likely that the organization will continue to receive funds from this source in the future. This conclusion could not be made with as much confidence on the basis of one Form 990-PF.
Finally, we will be offering suggestions on how information reported on the Form 990-PF might be interpreted. These suggestions should be taken as just that — suggestions. In many cases there will be other ways the data might be interpreted. An interpretation of each particular Form 990-PF’s data will depend on the abundance of particular facts reported in each Form 990-PF. Our suggestions are offered to help you develop an aptitude for thinking about the various ways the information contained in the Form 990-PF might be interpreted.
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