When a nonprofit puts money into a permanent, internally managed endowment that is “program-related” (e.g., a fund for education projects), those restricted endowment funds are lumped in with all other endowment funds on the current IRS Form 990 (see Part X, Balance Sheet, Line 29, and Schedule D, Part V, Endowment Funds). As a result, these increases in program-related endowment funds do not show up anywhere on the 990 as a “program-related” expense, and in turn, a non-profit that is building its program-related endowments can look fairly inefficient in terms of the amount of money that it is putting into its programs, especially if the nonprofit is in the middle of a major endowment-building campaign.

To solve this information gap, the IRS should add a line or two on the 990 (probably as part of Schedule D, Part V, Endowment Funds, line 1b) to break out contributions to program-related endowments vs. contributions to operational and unrestricted endowments. Going one step further, those contributions to program-related endowments should then be added to Part IX, Statement of Functional Expense, lines 1 or 24 (or a new line), and finally on Line 13 (or a new line) of the program-related expenses listed on the front page of the 990.

With those changes in effect, you would have a more complete and more accurate picture of the funds that a non-profit has committed to its programs in any given year.

Add a place where a non-profit certifies that they understand and are following IRS publications 1771, 526, etc. and are not producing "fudged" gift acknowledgements such as those accepting pledge payments from donor advised funds or bifurcated payments from donor advised funds for event sponsorships. I can't tell you how many non profits I have worked for or come across who do not know how to properly receipt a gift (or even identify what is a gift and what is not). If you had to certify your understanding as part of the 990 then maybe charities would start taking this seriously - and maybe also donors would take it seriously.

Also - why was there not a fundraiser option under roles when I came to this site? I had to select "other". Fundraisers have a huge stake in what the 990 contains.

In reviewing many Form 990 returns for organizations of all sizes, I have noted a significant number of the Schedule A public support calculations are not prepared correctly. The instructions for the Schedule A public support calculation are straightforward and easy to follow. The preparer of the Form 990 may be required to look up definitions of terminology used in the instructions for Schedule A in the basic Form 990 instructions. The most common mistake I find is that organizations do not properly report the portion of their private contributions (from individuals or non 501(c)(3) public charities) which exceed 2% of the total support. I believe clarification in the instructions of what should be reported on this line item along with examples on how to determine the amount to be reported would be very beneficial to these organizations.