How to read a 990 tax return

A 990 tax return is the nonprofit version of an individual’s 1040 form. Most tax-exempt and nonprofit organizations must file this annual information return with the Internal Revenue Service (IRS) every year. Because these filings are public record, they are a vital source of data for effective prospect research and fundraising. 

When you review these files, you will mostly see two types of organizations: private foundations and public charities. The fields you review, and how you interpret them, depend on the type of organization. 

The 990 offers the transparency needed to judge an organization’s capacity by revealing its mission, grant guidelines, and asset details. It also serves as a central source for identifying official contact information, board membership, and specific gifts made by leadership. 

5-minute review of an IRS 990

If you’re short on time, a quick look at these core sections on a Form 990 shows where a tax-exempt organization stands:

• Page 1: Check the mission, total revenue, expenses, and net assets to get an instant snapshot of the nonprofit’s size and focus.
• Part VIII: Review this section to understand the organization’s revenue sources. 
• Part IX: Examine the breakdown of program costs versus fundraising and administrative expenses.
• Part VII: Look in this section to see details on executive compensation. 
• Part X: Scan this for a summary of assets, liabilities, and total net assets.
• Part VI and Schedule O: Use these sections to find information on the organization’s governance and additional explanations.

How to analyze key 990 sections

To effectively analyze a 990 tax return, you must know which 990 sections reveal a nonprofit’s financial health and mission alignment. 

Entity identification (page 1)

Verify the nonprofit’s tax-exempt status at the top of the form. Private foundation Form 990-PF is titled “Return of Private Foundation,” while a public charity Form 990 is titled “Return of Organization Exempt From Income Tax.” 

Use Box H or I, respectively, to confirm specific statuses like 501(c) entities, 4947(a)(1) non-exempt charitable trusts, and 527 political organizations. 

Distinguishing between these statuses is important because they’re covered by different IRS rules. For example,private operating foundations support their own programs differently from standard foundations. 

Organizational details and contact information (page 1)

Locate the nonprofit’s official name, mailing address, phone number, and principal officer at the top of the first page. 

Always verify these details to ensure you are researching the correct entity. This prevents matching errors, which are common when organizations share similar names. 

Fiscal reporting period (page 1)

Find the filing year on the top right-hand corner of the form. Also note the beginning and ending dates of their fiscal year.

It is essential to check these dates because many nonprofits use a non-calendar fiscal year. If the filing date is significantly later than the maximum five-month and fifteen-day period after the fiscal year-end, the nonprofit is typically experiencing administrative delays.

Mission statement and grant guidelines (Parts I, III, and XV)

Find a public charity’s mission statement in Part I, line 1, or Part III, line 1, to assess goal alignment with your organization. For grantmaking private foundations, review Form 990-PF, Part XV, lines 2a to 2d for grant guidelines, application instructions, and where to send letters of inquiry. 

This section confirms if a foundation accepts unsolicited proposals or restricts funding to preselected organizations. This knowledge will save you time in your outreach efforts.

Foundation assets and capacity (Part I, Box I)

Box I on the first page of a private foundation’s 990 lists the total fair market value of a private foundation’s assets. With the exception of private operating foundations, these organizations must pay out or donate 5 percent of their assets annually. 

This 5 percent figure includes both grant awards and the funds needed to run the foundation. Use this figure to create a reliable estimate of the foundation’s total giving capacity when rating potential funders.

Grant award analysis (Part XIV, line 3)

Part XIV, line 3, lists all organizations that received funding during the reporting year. 

Reviewing the grant ranges or the largest grant amounts helps you calibrate your own “ask.” Aligning your request with their historical grant sizes makes you a more realistic candidate for funding. 

Leadership and executive compensation (Part VII)

Part VII lists officers, directors, trustees, managers, key employees, and the highest-compensated individuals. 

Use these sections to see who is in charge and how much they are paid. If you are researching an individual’s personal wealth or giving capacity, this tells you their professional income.

Major contributors list (Schedule B)

Schedule B is a supplemental form to the 990 that lists contributions of $5,000 or more from a single source. It includes the contributor’s name, address, and total amount of money or property donated. 

Contributors can be companies, trusts, associations, or individuals. Since personal donations are often made by board members to their own foundations, this is the best place to find the largest gifts made by an individual. 

Advanced analysis of trends and red flags

To spot long-term trends, compare an organization’s 990s over three to five years. Significant shifts in financial data, such as sudden changes in spending categories or accounting methods, usually signal operational instability. This is especially vital in the current climate. 

According to the Center for Effective Philanthropy’s State of Nonprofits 2026 report, 57 percent of nonprofit leaders report increased difficulty securing foundation grants. Look for financial stress indicators during your 990 analysis to determine if the organization you’re researching is experiencing these sector-wide pressures or if it remains financially resilient.

Keep an eye out for these five “red flags”:

• Reporting discrepancies: Revenue or expenses that don’t match across different sections of the 990, or that contradict the nonprofit’s own website, suggest poor oversight.
• High fundraising costs: If an organization spends a large share of its total contributions just to raise those funds, it’s inefficient.
• High executive pay: Check Part VII for salaries that appear disproportionate to the total budget or mission-related spending compared to similar organizations. 
• Insider transactions (Schedule L): Business deals, loans, or rental agreements between the nonprofit and its board or staff require clear justification to ensure they are at fair market value.
• Governance gaps: Use Part VI to verify if the organization has independent board members and a clear conflict-of-interest policy. A lack of these indicates a risk to transparency.

Frequently asked questions

Where can you access 990s?

You will find 990s through your iWave subscription under the “Foundations” tab. Both public charities and private foundations are searchable by name.

Which organizations file 990s? 

Most nonprofits file 990s. Generally, all private foundations and nonprofits with gross receipts over $50,000 must file the 990 return. (Gross receipts are the total of all revenue for the year.) Nonprofits with $50,000 or less in receipts are eligible to file a shorter, simplified form called the 990-N. 

Which organizations do not file 990s?

Entities that do not have an IRS tax-exempt designation do not file 990s. If you are unsure about a particular organization, verify their tax-exemption status using the IRS Tax Exempt Organization Search. 

Do donor-advised funds (DAFs) file 990s?

DAFs cause confusion because they act like nonprofits but are actually managed by larger organizations like community foundations or financial firms (e.g., Fidelity, Charles Schwab, or Vanguard). The parent organization manages the fund and files the 990, but the individual donor-advised fund does not. 

Taking your 990 analysis further

There is a lot more information in a 990 than what was described here. After you get a feel for the sections that were covered, dig further into other financial details. This all helps you learn more about specific charities and foundations. 

The Internal Revenue Service provides plenty of help for your research. Start by looking at the official 990-PF instructions for private foundations and the instructions for public charities. When you don’t understand a term or section, try a quick Google search, find the answer, and keep digging!

About the Author:

Susan Hammerman is a former librarian with more than fifteen years of experience in the field of prospect research. She is the owner of Prospect Research Consulting LLC.

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