Public Disclosure Requirements for Foundations
Every organization exempt under Section 501(c)(3) of the Internal Revenue Code is required to disclose certain information to the public:
- The organization’s exemption application, Form 1023, is subject to public disclosure, along with any documents supporting the application and any letters from the IRS to the organization regarding its request for exemption. Exception: If the organization filed its exemption application before July 15, 1987, and lacked the exemption application on July 15, 1987, it does not need to make available its exemption application.
- The organization’s complete1 Form 990 annual information returns filed within the past three years. Exception: Except for private foundations, donor information included in Schedule B need not be disclosed to the public.
- The public must also have access to a foundation’s complete Form 990-T, Exempt Organization Business Income Tax Return including all attachments. Returns filed within the past three years beginning with the due date of the return (including any extension of time for filing) should be provided if requested.
There are two separate required components to public disclosure under federal law. First, a copy of the forms must be made available for public inspection at the foundation’s offices or another reasonable location without exception. If the foundation does not have a physical location, the public can request copies of the materials in writing. The foundation may charge a reasonable fee to cover copying and mailing costs. Second, foundations must supply a copy of each return to individuals who request them.
Copies should be provided immediately when requested in person, or within 30 days in the case of a written request (including email). The organization may charge the requester the actual postage plus up to 20 cents per page. To be able to respond to requests in a timely manner, one hint is to have a folder with all of the documents subject to public disclosure so they can be easily located if a request is made. In addition, making a public disclosure copy of Form 990 in advance allows someone the time to redact the names and addresses of donors from Schedule B to avoid inadvertent disclosure.
An alternative to providing hard copies is to make the foundation’s public disclosure documents available on a website, either its own or as part of a database maintained by another organization. The website must (1) alert readers that the document is available and provide instructions for accessing, viewing, downloading, and printing it in an accessible format; (2) must contain an exact replica of the foundation's documents (public charities may redact donor information); and (3) may not charge for downloading the documents. Note that making the information widely available does not exempt the foundation from the public inspection requirement: inquirers who come to your office should still be provided with a copy for inspection at its office(s).
Failure to comply with these requirements can result in penalties of $20 for those responsible per day for as long as the disclosure delay continues, up to $10,000 for each failure to provide a copy of the organization’s annual return(s). There is no maximum penalty for the failure to provide a copy of an exemption application, Form 1023.
Note that state laws may require additional disclosure requirements. For example, private foundations in New York are additionally required, under state law, to publish a notice in a newspaper annually that their Form 990-PF is available. Charities that solicit funds from the public may be required by state charitable solicitation laws to make certain financial information available to the public.
Finally, many organizations are choosing to disclose other information in the spirit of transparency. For example, community foundations confirmed in compliance with the National Standards for U.S. Community Foundations™, also make their annual audit available upon request. Similarly, the Council’s Stewardship Principles for Family Foundations list as a practice option to the principle of welcoming public interest and communicating openly to make public (on the Web and/or in print) the foundation's board of directors, mission, guidelines, grant process (including whether unsolicited proposals are accepted), finances, procedures, timetable, grantee list with amounts and purpose, etc.
For further information on public disclosure requirements, please visit the IRS FAQ on this topic. The IRS also has a helpful compliance guide for public charities and private foundations that includes a section on public disclosure.
1With the exception of redacting donor information (non-private foundations only), everything else in your Form 990 is subject to disclosure, so be careful not to list any non-required sensitive information. For example, if your foundation administers a scholarship program, do not include the recipient’s social security number or contact information.