Learning how to read a Form 990 is the quickest way for a donor to check a US charity before giving. The form is a public tax filing that shows where a charity’s money comes from, how it is spent and who is paid. You do not need an accountant to read a 990. You need to know where to look and which few numbers matter.
What Is a Form 990 and Who Files It?
Most tax-exempt organizations file an annual return with the IRS. Larger organizations file the full Form 990. Smaller ones may file the shorter Form 990-EZ, which is for organizations with gross receipts under $200,000 and total assets under $500,000. The smallest file a basic Form 990-N e-postcard, which is for gross receipts that are normally $50,000 or less. The full form has the most detail, so it is the most useful for donors, while a 990-EZ gives you only the basics.
Where to Find a Charity’s Form 990
Charities must make these returns available to the public. You can use the IRS Tax Exempt Organization Search to confirm that an organization is recognized as tax-exempt and to download its filings. ProPublica’s Nonprofit Explorer also lets you search by name and view each year’s return with key figures pulled out. Before you learn how to read a Form 990 in detail, download the latest three years so you can compare them.
How to Read a Form 990 Section by Section
The full form is long, but a donor can focus on a handful of parts.
| Where to look | What it tells you |
|---|---|
| Part I, Summary | Revenue, expenses and net assets for this year and last year |
| Part III, Program Service Accomplishments | What the charity says it does and its largest programs |
| Part VII, Compensation | Pay for officers, directors and top earners |
| Part VIII, Statement of Revenue | Where the money comes from |
| Part IX, Statement of Functional Expenses | How spending splits between programs, administration and fundraising |
| Part X, Balance Sheet | Assets, debts and net assets |
| Schedule O | Written explanations for answers elsewhere on the form |
Schedule O is easy to miss. It holds the plain-language notes that explain unusual numbers, so read it whenever something looks off. Part VIII also has a column for unrelated business revenue, which is income from activities not tied to the charity’s mission. Small amounts are common. Large amounts are worth a question.
Three Numbers Worth Checking
Once you know how to read a Form 990, three numbers do most of the work.
- Program spending share. In Part IX, divide program service expenses by total expenses. A higher share usually means more of each dollar reaches the mission, but context matters.
- Fundraising cost. Compare fundraising expenses with the money raised. A charity that spends a large part of its income on raising more money deserves a closer look.
- Executive pay. Part VII lists pay for leaders and top earners. Schedule J gives more detail when anyone’s reportable compensation is above $150,000. Compare pay with the size of the organization.
Part I shows this year beside last year, so also look for sharp swings in revenue, expenses or net assets.
Red Flags to Look For
- Revenue or expenses that jump sharply with no explanation in Schedule O
- Fundraising costs that are very high compared with what is raised
- Payments to board members or their relatives, which appear in Schedule L
- No independent board members or no conflict-of-interest policy in Part VI
- Late or missing filings
- No audited financial statements for a larger organization
One red flag is a reason to ask questions, not proof of wrongdoing.
What a Form 990 Cannot Tell You
A 990 is a financial snapshot, not proof of impact. It does not show whether a school stayed open or a water plant kept running. A young charity may have only a short filing history, and a low program share can reflect a one-time cost rather than poor management. If a charity works overseas, ask how funds reach projects on the ground and what reports it can share. Our guide to transparent nonprofit management covers what openness looks like in practice. That is why learning how to read a Form 990 is only the first step in checking a charity.
Common Questions About How to Read a Form 990
Q1. Do I need an accountant to learn how to read a Form 990?
No. Start with Part I, Part VII, Part IX and Schedule O. Those four places answer most donor questions.
Q2. What is the difference between a Form 990 and a 990-EZ?
The 990-EZ is a shorter version for smaller organizations. It has fewer details, so the full 990 is easier to use for judging a charity.
Q3. Where is executive pay on a Form 990?
It is in Part VII. Schedule J adds detail when reportable pay is above $150,000.
Q4. How do I compare two charities?
Use the same year for both, then compare program spending share, fundraising cost and pay. Look at three years if you can.
Now that you know how to read a Form 990, pull up the last three years for any charity you are considering and compare the numbers above. If you are still weighing why to give at all, see our article on reasons to donate to charity.