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Lesson 15 of 36 · Read the Money

Shake Rag Alley’s Form 990: A Board Case Study

Open alongside this lesson

Project resources

Form 990 is an annual public information return, not an audit opinion, budget, or complete management statement 1. It is still one of a director’s most useful orientation documents.

Public snapshot

The public filings summarized by ProPublica show 2:

Item FY2023 FY2024 Change
Total revenue $497,144 $678,006 +$180,862 / +36.4%
Total expenses $471,523 $504,699 +$33,176 / +7.0%
Change/net income $25,621 $173,307 +$147,686
End net assets $819,256 $993,533 +$174,277
Contributions $182,050 $408,835 +$226,785 / +124.6%
Program-service revenue $247,907 $186,667 −$61,240 / −24.7%
Rental income $32,053 $32,275 +$222

FY2024 details:

  • assets: $1,272,717;
  • liabilities: $279,184;
  • wages: $182,203, 36.1% of total expense;
  • investment income: $12,989;
  • net rental income reported: $32,275;
  • net fundraising-event income reported: $1,411;
  • net gain on asset sales: $24,119;
  • current filing reports $0 compensation to directors.
Proportional chart of Shake Rag Alley 2024 Form 990 revenue led by contributions and program services
Fiscal 2024 public-return snapshot. Contributions were 60.3% of total revenue; program-service revenue was 27.5%. This describes one filed year, not recurring operating availability. Credit: StudyCorner original analysis of public Form 990 data · CC BY 4.0 · Source

Calculate before interpreting

Contributions share

$408,835 / $678,006 = 60.3%

FY2023:

$182,050 / $497,144 = 36.6%

Program-service share

$186,667 / $678,006 = 27.5%

FY2023:

$247,907 / $497,144 = 49.9%

Liability-to-asset snapshot

$279,184 / $1,272,717 = 21.9%

Expense growth

($504,699 − $471,523) / $471,523 = 7.0%

These calculations create questions, not verdicts.

The board questions

Contribution spike

  • What gifts or grants explain the $226,785 increase?
  • How much was donor-restricted by purpose or time?
  • Was any amount capital, planned, one-time, multiyear, or in-kind?
  • Did a campaign or accounting-timing event occur?
  • Which portion should not support recurring expense?
  • Is donor concentration higher?

Program-service decline

  • Which program families changed?
  • Is this volume, price, mix, cancellation, scholarship, timing, or classification?
  • Did the prior year include an unusual program?
  • Did contributed funding intentionally expand access?
  • What do current enrollment and forward bookings show?

Surplus and net assets

  • How much increased unrestricted liquid resources?
  • What portion is restricted or invested in property?
  • Did receivables, deferred revenue, debt, or capital assets move?
  • What is the recurring operating result excluding one-time/restricted/capital items?
  • How does the internal statement reconcile to the return?

Asset sale gain

  • What was sold, who authorized it, and was it mission/property related?
  • Is the $24,119 gain distinct from cash proceeds?
  • Were donor, preservation, or board restrictions involved?
  • Is this excluded from operating trend analysis?

Read the whole return

Do not stop at Part I. Inspect:

  • Part III: mission and program accomplishments—does narrative communicate public value?
  • Part IV: schedules required;
  • Part VI: governance, policies, board independence, return review, availability;
  • Part VII: officers/directors/key employees and compensation;
  • Part VIII: revenue classification;
  • Part IX: functional expense;
  • Part X: balance sheet;
  • Part XI/XII: reconciliation and accounting/reporting;
  • Schedules A/B/D/G/L/O when present: public support, contributions, supplemental financial data, fundraising/gaming, interested transactions, explanation.

The public version generally omits donor-identifying Schedule B information.

Board review process

The IRS asks whether a complete copy was provided to governing-body members before filing and requests a description of the review process; federal tax law does not itself require board review 3. Good practice:

  1. finance/management and preparer reconcile to approved records;
  2. finance/audit committee reviews numbers, classifications, governance answers, and narrative;
  3. every director receives the complete board-review copy securely in time;
  4. questions and corrections go to named owners;
  5. authorized filer approves/signs;
  6. final public and confidential copies are stored correctly;
  7. governance or control gaps become action items.

Focus on:

  • mission description and program narrative;
  • officer names/terms/time/compensation;
  • conflict and related-party answers;
  • board-review description;
  • fundraising/event/gaming reporting;
  • revenue/expense classification;
  • significant changes and Schedule O explanations;
  • reconciliation to audited/reviewed/internal statements.

Write a board memo

Prepare one page:

Three facts: exact filing figures
Three hypotheses: clearly labeled, not asserted
Five internal documents needed: restriction schedule, recurring bridge, cash forecast, program revenue detail, asset transaction record
Two decisions/monitoring needs: what belongs on a future agenda

The discipline is crucial: public fact → tentative interpretation → internal verification → governance action.

Source trail

References

  1. 1
    About Form 990. Internal Revenue Service. verifiedOfficial Form 990 purpose and schedule index. Cited at: purpose.
  2. 2
    Shake Rag Alley Inc — IRS Form 990 Filings. ProPublica Nonprofit Explorer. verifiedSearchable presentation of IRS filing data. The course uses the fiscal-2024 filing filed August 20, 2025 and compares prior years. Cited at: 2023 and 2024 filings.
  3. 3
    Form 990 Part VI — Board Review of Return. Internal Revenue Service. verifiedOfficial explanation that board review is not federally required but is a reported governance practice. Cited at: board review.
Further reading
  • Form 990 Part VI — Governance. Internal Revenue Service. verifiedOfficial explanation of governance questions and the distinction between legal requirements and reported practices.

Check your understanding

  1. What is the best interpretation of Shake Rag’s 2024 Form 990 surplus?
  2. Why compare multiple years?