Discover the key reasons why timely Form 990 filing is crucial for your non-profit’s success.

Filing beyond the normal deadline can have several negative implications for a non-profit organization.

Here are some key considerations:

1. Donor Perception and Confidence

Timeliness and Transparency:

Significant donors often look at the timeliness of filings as a measure

of the organization's operational efficiency and transparency. Late

filings can signal mismanagement or financial instability.

Trust Issues: Consistent, timely filings help maintain donor trust and confidence.

Delays can lead to doubts about how funds are being managed and used,

potentially affecting future donations.

2.Publication 78

Updated Listings:

IRS Publication 78 is an online tool that lists organizations eligible

to receive tax-deductible charitable contributions. If a non-profit

fails to file its returns timely, it may risk being removed from this

list, making it less attractive to donors looking for tax deductions.

Compliance Status: The timeliness of filing helps maintain an organization’s good standing

with the IRS, ensuring it remains listed in Publication 78 and publicly

perceived as compliant and trustworthy.

3. Grant Issuers and Funding Requirements

Application Requirements:

Many grant issuers require up-to-date financial statements and proof of

compliance with IRS filing requirements as part of the grant

application process. Late filings can disqualify a non-profit from

applying for or receiving grants.

Accountability: Grant providers often review the timeliness of filings as part of their

due diligence process. Late returns can be seen as a lack of

accountability, which may deter grant issuers from funding the

organization.

Competitive Edge: Non-profits that file on time demonstrate reliability and proper

governance, which can give them a competitive edge in securing grants

compared to those with delayed filings.

4. Regulatory Compliance and Penalties

State Requirements: In addition to federal requirements,many states require timely filings

to maintain registration and good standing.Late filings can result in

penalties, additional fees, and even revocation of state-level

charitable status.

IRS Penalties: While non-profits can file for an extension, failure to file by the

extended due date can result in IRS penalties, including daily accruals

that can significantly impact the organization's finances.

5. Good Accounting Practices

No Excuse for Delays: There should be no reason for the delay of a Form 990 filing if there

is a good and timely system of accounting in place.With proper

accounting practices, financial records should be well-organized and readily available, facilitating the timely preparation and filing of tax returns.

Conclusion

Filing beyond the normal deadline can negatively impact a non-profit's reputation, donor trust, eligibility for grants, and overall compliance status. Similar to being late for a job interview, late filings create a poor impression, suggesting disorganization and unreliability. Non-profits already have 5 months from the end of the year to do a normal timely filing, and with good accounting systems,this should be achievable.

As competition heats up between non-profits in reaching the pockets of donors and grant issuers, these factors play an increasingly important role.

To maintain transparency, donor confidence, and eligibility for various funding opportunities, it is crucial for non-profits to file timely.