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AFP submits comments on proposed Form 990 changes

WASHINGTON (AFP eWire - Jan. 28, 2003) - On Tuesday, Jan. 28, 2003, the Association of Fundraising Professionals (AFP) submitted formal comments to the Internal Revenue Service (IRS) regarding its proposed changes to the Form 990, including clarifications about how fundraising costs are reported.

The Form 990 is the primary government reporting and regulatory document that most charities in the United States must complete and file annually with the IRS. The agency had proposed several changes, including clarifying the reporting of fundraising costs and adding sections related to foreign grants and corporate disclosure.

In its comments, AFP agreed with the IRS mandate that charities completing Section II of the Form 990 (related to program, fundraising and administrative costs) should do so in compliance with Statement of Position 98-2, developed by the American Institute of Certified Public Accountants. However, AFP argued that because of the burdens that SOP 98-2 places on organizations, the requirement should apply only to charities with annual receipts of $1 million or more.

AFP's comments centered on the growing use of the Form 990 as a public accountability tool, and whether the document is being used for too many purposes. The association noted that the original purpose of the form was as a government oversight tool, and that 'the twin goals of government reporting and oversight, and public accountability are conflicting and leading to a document that has become perilously overburdened.'

While strongly supporting public disclosure, AFP is concerned that most of the information on the form is of little value to the average donor, and that lengthening the form is only making it more complicated and less useful. In its comments, AFP urged the IRS to consider overhauling the form or creating a shorter, simpler companion form that could be used for public accountability purposes. The IRS could begin by ascertaining what type of data the public most often examines in making its giving decisions.

AFP also disagreed with the IRS proposal to dramatically increase the information reported about foreign grants. 'We respect the role of the federal government in halting terrorism,' said AFP president and CEO Paulette V. Maehara, 'but the burdens that will be placed on thousands of legitimate charities with operations overseas is simply too much to justify.' In its comments, AFP noted there was no basis to suggest that many nonprofits are involved with aiding terrorist activities, and those very few nonprofits that might be involved with terrorism are not going to disclose that information on the Form 990.

The IRS will be reviewing comments and introducing final proposals later this year. A copy of AFP's comments is available under Attachments, below.


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