Form 990 Part VI
Part VI
Governance, Management, and Disclosure
Section A. Governing Body and Management
For each “Yes” response to lines 2 through 7b below, and for a “No” response to line 8a, 8b, or 10b below, describe the circumstances, processes, or changes on Schedule O.
📌 Part VI. Governance, Management, and Disclosure. A review of an organization’s governing body, management policies, and public disclosure practices.
Part VI requests information regarding an organization’s governing body and management, governance policies, and disclosure practices. Although federal tax law generally doesn’t mandate particular management structures, operational policies, or administrative practices, every organization is required to answer each question in Part VI. For example, all organizations must answer lines 11a and 11b, which ask about the organization’s process, if any, it uses to review Form 990, even though the governing body isn’t required by federal tax law to review Form 990.
| Line | Question | Line Instructions |
|---|---|---|
| Form 990 Part VI Line 1a | Enter the number of voting members of the governing body at the end of the tax year. If there are material differences in voting rights among members of the governing body, or if the governing body delegated broad authority to an executive committee or similar committee, explain on Schedule O. | Line 1a The governing body is the group of one or more persons authorized under state law to make governance decisions on behalf of the organization and its shareholders or members, if applicable. The governing body is, generally speaking, the board of directors (sometimes referred to as “board of trustees”) of a corporation or association, or the trustee or trustees of a trust (sometimes referred to as the “board Example: A voluntary employees’ beneficiary association (VEBA) that is a trust with a single bank as its sole trustee would report one voting member of the governing body. Schedule O (Form 990) |
| Form 990 Part VI Line 1b | Enter the number of voting members included on line 1a, above, who are independent. | Line 1b.
Note: The independence standard for purposes of Part VI isn’t the same as the “absence of conflict of interest” standard for purposes of the rebuttable presumption under Regulations section 53.4958-6, which focuses on conflicts with respect to a particular transaction. A member of the governing body isn’t considered to lack independence merely because of the following circumstances.
Example 1: B is a voting member of the organization’s board of directors. B is also a partner with a profits and capital interest greater than 35% in a law firm, C, that charged $120,000 to the organization for legal services in a court case. The transaction between C and the organization must be reported on Schedule L (Form 990) because it is a transaction between the organization and an entity of which B is a more-than-35% owner, and because the payment to C from the organization exceeded $100,000 (see the instructions for Schedule L (Form 990), Part IV, regarding both factors). Accordingly, B isn’t an independent member of the governing body because the $120,000 payment must be reported on Schedule L (Form 990) as an indirect business transaction with B. If B were an associate attorney (an employee) rather than a partner with a greater-than-35% interest, and not an officer, director, trustee, or owner of the law firm, the transaction wouldn’t affect B’s status as an independent member of the organization’s governing body. Schedule L (Form 990) |
| Form 990 Part VI Line 2 | Did any officer, director, trustee, or key employee have a family relationship or a business relationship with any other officer, director, trustee, or key employee? | Line 2 Answer “Yes” if any of the organization’s current officers, directors, trustees, or key employees, as reported in Part VII, Section A, had a family relationship or business relationship with another of the organization’s current officers, directors, trustees, or key employees at any time during the organization’s tax year. For each relationship, identify the persons and describe their relationship on Schedule O (Form 990). It is sufficient to enter “family relationship” or “business relationship” without greater detail.
Privileged relationship exception. For purposes of line 2, a business relationship doesn’t include a relationship between an attorney and client, a medical professional (including psychologist) and patient, or a priest/clergy and penitent/communicant. Example 1. B is an officer of the organization, and C is a member of the organization’s governing body. B is C’s sister’s spouse. The organization must report that B and C have a family relationship. Example 2. D and E are officers of the organization. D is also a partner in an accounting firm with 300 partners (with a 1/300 interest in the firm’s profits and capital) but isn’t an officer, director, or trustee of the accounting firm. D’s accounting firm provides services to E in the ordinary course of the accounting firm’s business, on terms generally offered to the public, and receives $100,000 in fees during the year. The relationship between D and E isn’t a reportable business relationship, either because (1) it is in the ordinary course of business on terms generally offered to the public, or (2) D doesn’t hold a greater-than-35% interest in the accounting firm’s profits or capital. Example 3. F and G are trustees of the organization. F is the owner and CEO of an automobile dealership. G purchased a $45,000 car from the dealership during the organization’s tax year in the ordinary course of the dealership’s business, on terms generally offered to the public. The relationship between F and G isn’t a reportable business relationship because the transaction was in the ordinary course of business on terms generally offered to the public. Example 4. H and J are members of the organization’s board of directors. Both are CEOs of publicly traded corporations and serve on each other’s board. The relationship between H and J is a reportable business relationship because each is a director or officer in the same business entity. Example 5. K is an officer of the organization, and L is on its board of directors. L is a greater-than-35% partner of a law firm that charged $60,000 during the organization’s tax year for legal services provided to K that were worth $600,000 at the law firm’s ordinary rates. Thus, the ordinary course of business exception doesn’t apply. However, the relationship between K and L isn’t a reportable business relationship because of the privileged relationship of attorney and client. Reasonable effort. The organization isn’t required to provide information about a family or business relationship between two officers, directors, trustees, or key employees if it is unable to secure the information after making a reasonable effort to obtain it. An example of a reasonable effort would be for the organization to distribute a questionnaire annually to each such person that includes the name and title of each person reporting information, blank lines for those persons’ signatures and signature dates, and the pertinent instructions and definitions for line 2. Schedule O (Form 990) |
| Form 990 Part VI Line 3 | Did the organization delegate control over management duties customarily performed by or under the direct supervision of officers, directors, trustees, or key employees to a management company or other person? | Line 3 Answer “Yes” if, at any time during the organization’s tax year, the organization used a management company or other person (other than persons acting in their capacities as officers, directors, trustees, or key employees) to perform any management duties customarily performed by or under the direct supervision of officers, directors, trustees, or key employees. Such management duties include, but aren’t limited to: hiring, firing, and supervising personnel; planning or executing budgets or financial operations; or supervising exempt operations or unrelated trades or businesses of the organization. Management duties don’t include administrative services (such as payroll processing) that don’t involve significant managerial decision making. Management duties also don’t include investment management unless the filing organization conducts investment management services for others. Schedule O (Form 990) |
| Form 990 Part VI Line 4 | Did the organization make any significant changes to its governing documents since the prior Form 990 was filed? | Line 4 The organization must report significant changes to its organizing or enabling document by which it was created (articles of incorporation, association, or organization; trust instrument; constitution; or similar document), and to its rules governing its affairs commonly known as bylaws (or regulations, operating agreement, or similar document). Report significant changes that weren’t reported on any prior Form 990, and that were made before the end of the tax year. Don’t report changes to policies described or established outside of the organizing or enabling document and bylaws (or similar documents), such as adoption of, or change to, a policy adopted by resolution of the governing body that doesn’t entail a change to the organizing document or bylaws. TIP: An organization must report significant changes to its organizational documents on Form 990, Part VI, rather than in a letter to EO Determinations. EO Determinations no longer issues letters confirming the tax-exempt status of organizations that report significant changes to their organizational documents, though it will, on request, issue an affirmation letter confirming an organization’s name change. The IRS will no longer require a new exemption application from a domestic § 501(c) organization that undergoes certain changes of form or place of organization described in Rev. Proc. 2018-15. Schedule O (Form 990) |
| Form 990 Part VI Line 5 | Did the organization become aware during the year of a significant diversion of the organization’s assets? | Line 5.
Note. A diversion of assets can in some cases be inurement of the organization’s net earnings. In the case of § 501(c)(3), § 501(c)(4), and § 501(c)(29) organizations, it can also be an excess benefit transaction taxable under § 4958 and reportable on Schedule L (Form 990). Schedule L (Form 990) Schedule O (Form 990) |
| Form 990 Part VI Line 6 | Did the organization have members or stockholders? | Line 6 Answer “Yes” if the organization is organized as a stock corporation, a joint-stock company, a partnership, a joint venture, or an LLC. Also answer “Yes” if the organization is organized as a non-stock, nonprofit, or not-for-profit corporation or association with members. For purposes of Form 990, Part VI, a “member” is any person who, pursuant to the organization’s governing documents or applicable state law, has the right to participate in the organization’s governance or to receive distributions of income or assets. This does not include members of the governing body. For purposes of Part VI, a membership organization includes members with the following kinds of rights:
Describe on Schedule O (Form 990) the classes of members or stockholders with the rights described above. Schedule O (Form 990) |
| Form 990 Part VI Line 7a | Did the organization have members, stockholders, or other persons who had the power to elect or appoint one or more members of the governing body? | Line 7a Answer “Yes” if at any time during the organization’s tax year there were one or more persons (other than the organization’s governing body itself, acting in such capacity) that had the right to elect or appoint one or more members of the organization’s governing body. If “Yes,” describe on Schedule O (Form 990) the class or classes of such persons and the nature of their rights. Schedule O (Form 990) |
| Form 990 Part VI Line 7b | Are any governance decisions of the organization reserved to (or subject to approval by) members, stockholders, or persons other than the governing body? | Line 7b Answer “Yes” if at any time during the organization’s tax year any governance decisions of the organization were reserved to (or subject to approval by) members, stockholders, or persons other than the governing body. If “Yes,” describe on Schedule O (Form 990) the class or classes of such persons, the decisions that require their approval, and the nature of their voting rights. Schedule O (Form 990) |
| Form 990 Part VI Line 8 Line 8a Line 8b | Did the organization contemporaneously document the meetings held or written actions undertaken during the year by the following:
| Line 8 Answer “Yes” on lines 8a and 8b if the organization contemporaneously documented by any means permitted by state law every meeting held and written action taken during the organization’s tax year by its governing body and committees with authority to act on its behalf. Documentation can include approved minutes, email, or similar writings that explain the action taken, when it was taken, and who made the decision. Schedule O (Form 990) |
| Form 990 Part VI Line 9 | Is there any officer, director, trustee, or key employee listed in Part VII, Section A, who cannot be reached at the organization’s mailing address? If “Yes,” provide the names and addresses on Schedule O | Line 9 The IRS needs a current mailing address to contact the organization’s officers, directors, trustees, or key employees. The organization can use its official mailing address stated on the first page of Form 990. Otherwise, enter on Schedule O (Form 990) the mailing addresses for such persons who are to be contacted at a different address. Such information will be available to the public. Schedule O (Form 990) |
Section B. Policies
(This Section B requests information about policies not required by the Internal Revenue Code.)
📌 Part VI. Governance, Management, and Disclosure. A review of an organization’s governing body, management policies, and public disclosure practices.
Even though the information on policies and procedures requested in Section B generally isn’t required under the Code, the IRS considers such policies and procedures to generally improve tax compliance. The absence of appropriate policies and procedures can lead to opportunities for excess benefit transactions, inurement, operation for nonexempt purposes, or other activities inconsistent with exempt status. Whether a particular policy, procedure, or practice should be adopted by an organization depends on the organization’s size, type, and culture. Accordingly, it is important that each organization consider the governance policies and practices that are most appropriate for that organization in assuring sound operations and compliance with tax law. For more governance information relating to charities, go to IRS.gov/Charities and click on Lifecycle of an Exempt Organization.
Answer “Yes” to any question in this section that asks whether the organization had a particular policy or practice only if the organization’s governing body (or a committee of the governing body, if the governing body delegated authority to that committee to adopt the policy) adopted the policy by the end of its tax year, and if the policy applied to the organization as a whole. If the policy applied only on a division-wide or department-wide level, answer “No.” The organization may explain the scope of such policy on Schedule O (Form 990).
| Line | Question | Line Instructions |
|---|---|---|
| Form 990 Part VI Line 10a | Did the organization have local chapters, branches, or affiliates? | Line 10a. |
| Form 990 Part VI Line 10b | If “Yes,” did the organization have written policies and procedures governing the activities of such chapters, affiliates, and branches to ensure their operations are consistent with the organization’s exempt purposes? | Line 10b. Note. The central organization (parent organization) named in a group exemption letter is required to have general supervision or control over its subordinate organizations as a condition of the group exemption. |
| Form 990 Part VI Line 11a | Has the organization provided a complete copy of this Form 990 to all members of its governing body before filing the form? | Line 11a. Schedule O (Form 990) |
| Form 990 Part VI Line 11b | Describe on Schedule O the process, if any, used by the organization to review this Form 990. | Line 11b. Example: The return preparer emails a copy of the final version of Form 990 to each Board member before it was filed. However, no Board member undertakes any review. Because a copy was provided to each member of the governing body before filing, the organization can answer “Yes” to line 11a, but it must still describe its review process (or lack thereof) on Schedule O (Form 990). Schedule B (Form 990) Schedule O (Form 990) |
| Form 990 Part VI Line 12a | Did the organization have a written conflict of interest policy? If “No,” go to line 13 | Line 12a. A conflict of interest arises when a person in a position of authority over an organization, such as an officer, director, manager, or key employee can benefit financially from a decision he or she could make in such capacity, including indirect benefits such as to family members or businesses with which the person is closely associated. For this purpose, a conflict of interest doesn’t include questions involving a person’s competing or respective duties to the organization and to another organization, such as by serving on the boards of both organizations, that don’t involve a material financial interest of, or benefit to, such person. Example: B is a member of the governing body of X Charity and of Y Charity, both of which are § 501(c)(3) public charities with different charitable purposes. X Charity has taken a public stand in opposition to a specific legislative proposal. At an upcoming board meeting, Y Charity will consider whether to publicly endorse the same specific legislative proposal. While B may have a conflict of interest in this decision, the conflict doesn’t involve a material financial interest of B’s merely as a result of Y Charity’s position on the legislation. |
| Form 990 Part VI Line 12b | Were officers, directors, or trustees, and key employees required to disclose annually interests that could give rise to conflicts? | Line 12b. |
| Form 990 Part VI Line 12c | Did the organization regularly and consistently monitor and enforce compliance with the policy? If “Yes,” describe on Schedule O how this was done | Line 12c. Schedule O (Form 990) |
| Form 990 Part VI Line 13 | Did the organization have a written whistleblower policy | Lines 13. TIP: Certain federal or state laws provide protection against whistleblower retaliation and prohibit destruction of certain documents. For instance, while the federal Sarbanes-Oxley legislation generally doesn’t pertain to tax-exempt organizations, it does impose criminal liability on tax-exempt as well as other organizations for (1) retaliation against whistleblowers that report federal offenses, and (2) destruction of records with the intent to obstruct a federal investigation. See 18 U.S.C. section 1513(e) and 1519. Also note that an organization is required to keep books and records relevant to its tax exemption and its filings with the IRS. Some states provide additional protection for whistleblowers. |
| Form 990 Part VI Line 14 | Did the organization have a written document retention and destruction policy? | Lines 14. |
| Form 990 Part VI Line 15 | Did the process for determining compensation of the following persons include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision? | Line 15.
Answer “Yes” on line 15b if the process for determining compensation of one or more officers or key employees other than the top management official included all of the elements listed above. If the answer was “Yes” on line 15a or 15b, describe the process on Schedule O (Form 990), identify the offices or positions for which the process was used to establish compensation of the persons who served in those offices or positions, and enter the year in which this process was last undertaken for each such person. If the organization didn’t compensate its CEO, executive director, or top management official during the tax year, answer “No” to line 15a. If the organization didn’t compensate any of its other officers or key employees during the tax year, even if such employees were compensated by a related organization, answer “No” to line 15b. Schedule J (Form 990) Schedule O (Form 990) |
| Form 990 Part VI Line 15a | The organization’s CEO, Executive Director, or top management official | Line 15a. Note: If “Yes” to line 15a, describe the process on Schedule O. Schedule O (Form 990) |
| Form 990 Part VI Line 15b | Other officers or key employees of the organization | Line 15b. Note: If “Yes” to line 15b, describe the process on Schedule O. Schedule O (Form 990) |
| Form 990 Part VI Line 16a | Did the organization invest in, contribute assets to, or participate in a joint venture or similar arrangement with a taxable entity during the year? | Line 16a. Disregard ventures or arrangements that meet both of the following conditions.
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| Form 990 Part VI Line 16b | If “Yes,” did the organization follow a written policy or procedure requiring the organization to evaluate its participation in joint venture arrangements under applicable federal tax law, and take steps to safeguard the organization’s exempt status with respect to such arrangements? | Line 16b.
Some examples of safeguards include the following.
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Section C. Disclosure
📌 Part VI. Governance, Management, and Disclosure. A review of an organization’s governing body, management policies, and public disclosure practices.
| Line | Question | Line Instructions |
|---|---|---|
| Form 990 Part VI Line 17 | List the states with which a copy of this Form 990 is required to be filed | Line 17 List the states with which a copy of this Form 990 is required to be filed, even if the organization hasn’t yet filed Form 990 with that state. Use Schedule O (Form 990) if additional space is necessary. TIP: Some states require or permit the filing of Form 990 to fulfill state exempt organization or charitable solicitation reporting requirements. |
| Form 990 Part VI Line 18 | Section 6104 requires an organization to make its Forms 1023 (1024 or 1024-A, if applicable), 990, and 990-T (section 501(c)(3)s only) available for public inspection. Indicate how you made these available.
| Line 18 Check the box for “Own website” only if the organization posted an exact reproduction (other than for information permitted by law to be withheld from public disclosure, such as the names and addresses of contributors listed on Schedule B (Form 990)) of its Form 990, Form 990-T (for § 501(c)(3) organizations), or application for recognition of exemption (Form 1023, 1023-EZ, 1024, or 1024-A) on its website during its tax year. Check the box for “Another’s website” only if the organization provided to another individual or organization and that other individual or organization posted on its website, an exact reproduction (other than for information permitted by law to be withheld from public disclosure, such as the names and addresses of contributors listed on Schedule B (Form 990)) of any such forms during the tax year. If “Other” is checked, explain on Schedule O (Form 990). Also explain on Schedule O (Form 990) if the organization didn’t make publicly available upon request any of Forms 1023, 1023-EZ, 1024, 1024-A, 990, or 990-T that are subject to public inspection requirements. Exempt organizations must make available for public inspection their Form 1023, 1023-EZ, 1024, or 1024-A application for recognition of exemption. Applications filed before July 15, 1987, need not be made publicly available unless the organization had a copy on July 15, 1987. Organizations that file Form 990 must make it publicly available for a period of 3 years from the date it is required to be filed (including extensions) or, if later, is actually filed. Organizations aren’t required to make publicly available the names and addresses of contributors (as set forth on Schedule B (Form 990), and on Form 1023, 1023-EZ, 1024, or 1024-A). Section 501(c)(3) organizations that file Form 990-T are also required to make their Forms 990-T publicly available for the corresponding 3-year period for forms filed after August 17, 2006 (unless the form was filed solely to request a refund of telephone excise taxes). See Appendix D for more information on public inspection requirements. |
| Form 990 Part VI Line 19 | Describe on Schedule O whether (and if so, how) the organization made its governing documents, conflict of interest policy, and financial statements available to the public during the tax year. | Line 19 Explain on Schedule O (Form 990) whether the organization made its governing documents (for example, articles of incorporation, constitution, bylaws, trust instrument), conflict of interest policy, and financial statements (whether or not audited) available to the general public during the tax year, and, if so, how it made them available to the public (for example, posting on the organization’s website, posting on another website, providing copies on request, inspection at an office of the organization, etc.). If the organization didn’t make any of these documents available to the public, enter “No documents available to the public.” Federal tax law doesn’t require that such documents be made publicly available unless they were included on a form that is publicly available (such as Form 1023, 1023-EZ, 1024, or 1024-A). |
| Form 990 Part VI Line 20 | State the name, address, and telephone number of the person who possesses the organization’s books and records. | Line 20 Provide the name of the person who possesses the organization’s books and records, and the business address and telephone number of such person (or of the organization if the books and records are kept by such person at a personal residence). If the books and records are kept at more than one location, provide the name, business address, and telephone number of the person responsible for coordinating the maintenance of the books and records. The organization isn’t required to provide the address or telephone number of a personal residence of an individual. If provided, however, such information will be available to the public. |
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