Sample Policies for the New IRS Form 990

As you may know, the new IRS Form 990 requires organizations to adopt a number of policies in order to comply with the standards of governance, accountability, and transparency. To help you, the following are suggested procedures for some of the policies required on the new form.

Review of IRS form 990. All voting members of the Board of Directors will have access to the Form 990, for review purposes, prior to it being filed with the IRS. The Executive Director (or a similar position) will submit a draft copy of the form to the Board of Directors at the Board meeting. Each board member will be given the opportunity to respond to the Executive Director by asking questions or objecting to any information on the form. In the event that the objection cannot be resolved between the Board Member and the Executive Director, the return shall be extended and the subject be included as an agenda item at the next scheduled Board meeting.

Document destruction/retention policy. As described in the document retention policy: accounting documents, such as accounts receivable and payable ledgers, billing files and expense reports are retained for six years; administrative documents including leases and contracts, partnership agreements and bylaws are retained permanently; personnel records before employment including applications, resumes and job advancements are retained for one year; personnel records after employment including performance evaluations, employment contracts and salary information are retained for seven years after termination. No documents will be destroyed until they reach the age described in the retention policy.

Whistleblower policy. Written in the Code of Conduct, directors, volunteers, and employees are required to observe high standards of business and personal ethics in the conduct of their duties and responsibilities. It is the duty of all directors, officers and employees to comply with the Code and to report violations or suspected violations. No director, officer, or employee who in good faith reports a violation shall suffer harassment, retaliation or adverse employment consequences. An employee who retaliates against someone who has reported a violation in good faith is subject to discipline and possible termination.

Conflict of interest policy. Defined in the Board of Directors Conflict of Interest Policy, an interested person is any director, principal officer or member of a governing board who has a direct or indirect financial interest either through investment, business or family. In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest to the Board of Directors. After disclosure of the financial interest, the interested person shall leave the governing board while the determination of a conflict of interest is discussed and voted upon.

Compensation review. The Executive Director's total compensation package, including base salary, bonuses, and benefits, will be decided by the "Compensation Committee", made up of independent directors who do not have any personal interest in the compensation arrangement. The objective is to attract and retain key executive talent, as well as to pay reasonable compensation for services provided by officers and staff. In order to ensure reasonable compensation, the compensation committee will obtain compensation comparability data for the position. The comparability data may be based on industry surveys, use of a compensation consultant, documented compensation of persons holding similar positions in similar organizations, expert compensation studies, or other comparable data. The Compensation Committee will document the basis for its determination concurrently with the approval of the compensation package.

These are suggested procedures for just a few of the new Form 990 policies. Suggested procedures for many other policies, that may or may not apply to your organization, are available on our website.