Hi,
If you run a nonprofit, you are on the hook for a specific set of filings every year – and most boards have no idea which ones actually apply to them. They inherit whatever the last treasurer did, assume it is correct, and never check.
That guess costs money in both directions. Guess too low and you skip an audit your state or a funder required, then scramble to produce one after a grant is already on the line. Guess too high and you pay for audits nobody ever asked for. Either way you find out too late, and the consequence is never cheap.
The requirements are not a mystery. They are driven by a few specific numbers. Start with the 990, because the version you file is set by your size:
- Form 990-NΒ (e-Postcard): gross receipts normally $50,000 or less
- Form 990-EZ: gross receipts under $200,000 and assets under $500,000
- Form 990Β (full): gross receipts of $200,000 or more, or assets of $500,000 or more
- Form 990-PF: required for private foundations, whatever the size
File the wrong one, or file none, and the three-year clock toward automatic revocation keeps running – miss three years in a row and your tax-exempt status is gone.
Whether you also need an audit is a separate question, and it turns on your state, your funders, and your bylaws, not on your size alone. The three levels are not interchangeable:
- CompilationΒ – your numbers put into statement format, withΒ no assuranceΒ they are accurate
- ReviewΒ –Β limited assuranceΒ through inquiry and analysis, but no in-depth testing of transactions
- AuditΒ – theΒ highest level of assurance; the CPA tests transactions, examines evidence, and reports whether your statements are materially accurate
An audit is what most large grants, foundations, federal agencies, and state charity regulators actually require. Two more triggers catch boards off guard:
- AΒ Single AuditΒ kicks in when you spendΒ $1,000,000 or more in federal fundsΒ in a year (up from $750,000 for fiscal years starting on or after October 1, 2024), and it sits on top of your regular audit
- ManyΒ statesΒ require an audit or review once your annual contributions cross a set dollar amount, as a condition of staying registered to solicit there. Not sure what that is for your state? Just ask us π
The trap is always the same: you pay for a compilation or a review, assume the box is checked, and later learn a funder or your state requires a full audit. Now you are paying twice with grant deadlines on the line.
We map all of this out before you spend a dollar on the wrong thing – the right 990, whether your state or grants call for an audit, whether your federal funding triggers a Single Audit, and where you need to be registered.
Reply to this email by Friday and we will set up a free 15-minute call with one of our senior nonprofit specialists to pin down exactly what your organization needs, and what it does not.
Sincerely,
—
George Dimov, CPA
Licensed and Insured
(833) 829-1120 toll free
(212) 994-8081 Fax
www.dimovtax.com