By law, tax-exempt organizations are required to report directors, trustees, officers, key and highest-compensated employees, and certain individuals who formerly held these positions on Form 990, Part VII, Section A.
Directors and Trustees
A director or trustee is a member of the organization’s governing body. Only those with voting rights should be reported in Part VII. Members of advisory boards that don’t exercise any governance authority over the organization aren’t considered directors or trustees for Form 990. A director or trustee who served at any time during the organization’s tax year is deemed a current director or trustee and should be reported, regardless of whether compensation was received.
Officers
An officer is a person elected or appointed to manage the organization’s daily operations. Officers named on Form 990 are determined by reference to the organization’s bylaws, but at a minimum must include those required by applicable state law. Common officer titles include president, vice president, secretary and treasurer. For the purpose of Form 990, the organization’s top management and top financial official are also treated as officers, regardless of title. Officers are reported regardless of whether they received compensation. Any individual who served as an officer at any time during the tax year should be reported.
Key Employee
A person is considered a current key employee when all three of the following criteria are met:
- The individual receives reportable compensation of over $150,000 from the organization and related organizations during the calendar year that ends with or within the tax year.
- The individual has significant responsibilities within the organization – similar to those of an officer, director or trustee – or they have control over a major portion of the organization’s activities or manage a significant part of its resources.
- The individual is one of the top 20 employees who receives over $150,000 in compensation from the organization and all related organizations and has the appropriate level of responsibility.
If there are more than 20 individuals who meet the first two criteria, only the 20 with the highest compensation need to be reported.
Highest Compensated Employees
The five highest compensated employees are those who receive over $100,000 in reportable compensation from the organization and related organizations who are not already reported as current officers, directors, trustees or key employees.
Former
“Former” officers, directors, trustees and key employees should be reported if both of the following conditions apply:
- The filing organization reported or should have reported the individual as an officer, director, trustee or key employee on Form 990 within the past five years.
- The individual received reportable compensation from the organization and related organizations in excess of:
- $100,000 paid to former officers and key employees
- $10,000 paid to former directors and trustees for services rendered in their former capacity
“Former” highest compensated employees should only be reported if the following four criteria are met:
- The individual wasn’t an employee of the organization at any time during the calendar year ending with or within the organization’s tax year
- The individual was reported as a highest compensated employee on Form 990 within the past five years
- The individual’s reportable compensation exceeded $100,000 for the calendar year that ended with or within the organization’s tax year
- The amount of the individual’s reportable compensation for the year would place him or her among the organization’s current five highest compensated employees if the individual were an employee during the calendar year ending with or within the organization’s tax year
Compensation reported in Part VII includes any direct compensation from the organization, as well as any payments made by organizations related to the filing entity. Compensation is reported for the calendar year that ends with or within the tax year. Each individual listed in Part VII must also list the number of hours per week that they dedicated to fulfilling the duties of their position for the organization and/or any related organizations.
For questions on Form 990, Part VII please reach out to a member of the Schneider Downs Not-for-Profit group.
About Schneider Downs Not-for-Profit Services
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To learn more, visit our Not-for-Profit Industry Group page.
