The IRS Form 990 is the document nonprofits are required to file with the IRS in lieu of a business tax return once they average gross receipts of $25,000 or more over three years. According to the IRS requirements, nonprofits’ 990s are available to the general public. Cultural Data Profiles (CDP) are not publically available; organizations maintain control over which grantmakers may review their CDPs and all CDP data analyzed and published in research reports is aggregated to preserve organizations’ privacy.
Rather than using the financial information that nonprofits provide to the IRS, the CDP relies on audits, reviews, and other financial reports that follow Generally Accepted Accounting Principles (GAAP). GAAP accounting allows organizations to show a more complete picture of their organization and all of the ways that they support themselves. Financial statements following GAAP can include contributed goods and services, allocate joint costs across functional expense categories, and show the distinction between restricted and unrestricted revenue and balance sheet items. These detailed financial statements more fully represent an organization. The IRS Form 990 does not allow the inclusion of these items and distinctions.
The IRS Form 990 is primarily a compliance document. It is used by the IRS, donors, and the public to evaluate the transparency of an organization, its governance structure, and its fulfillment of the mission for which it was founded and granted tax-exempt status. By contrast, the CDP focuses on organizational activity in order to capture the full extent of an organization’s role in and contributions to the cultural sector. The CDP accepts data from non-501(c)(3) entities, such as fiscally sponsored organizations, cultural departments of universities, and entities under a parent organization, which do not fill out the IRS Form 990. This ensures that a broader range of cultural entities are included when researchers and advocates measure the cultural sector’s impact. The CDP also accepts data from organizations with average gross receipts below $25,000 over three years. These organizations are not required to fill out a 990 or a 990 EZ.
The 990 and the Cultural Data Profile are both multi-section forms that organizations should fill out annually. Both the 990 and the CDP collect historical data, based on an organization’s most recently completed fiscal year. The 990 and the CDP both contain financial and non-financial sections. Anyone can prepare a 990, and anyone can submit a CDP. However, organizations are best served by having the financial sections of both documents prepared by an experienced financial professional.
For more information about the 990, the IRS website has additional information here:
