What Is the IRS Form 990?
As tax-exempt not-for-profit organizations that are built by and belong to the communities they serve, many electric cooperatives are required to file an IRS Form 990 annually. This form is publicly available. It promotes transparency by providing an overview of the organization’s finances along with other information.
The numbers included in the below graphics are illustrative and are not designed for comparative purposes. Contact your local electric cooperative for more information specific to their Form 990 filings.
An Overview of the Co-op: The Summary Page
The first page of the form summarizes information reported in more detail elsewhere on the form, including information about the organization’s activities, governance, revenue, expenses, and net assets or fund balances.
The Co-op Balance Sheet: Part X of Form 990
Part X of the Form 990 provides a detailed breakdown of the electric co-op’s balance sheet. This includes more specific information about co-op assets and liabilities.
Executive and Board Compensation: Part VII and Schedule J of Form 990
The leadership of electric cooperatives, including co-op management and directors/trustees, are responsible for the long-term vision and efficient operation of the cooperative. This involves addressing the growing complexities of rapidly evolving energy technology, policy and market issues to fulfill the co-op’s mission of providing affordable and reliable electricity and promoting vibrant communities.
In doing so, management and directors spend substantial time providing oversight of the co-op’s operations, communicating with members, and maintaining their awareness of industry trends and issues that are specific to their co-op and the communities it serves. Both management and directors have a fiduciary duty to the co-op and are subject to potential liability for violating that duty.
Part VII
The IRS requires reporting of compensation to co-op officers, directors, key employees and highest-compensated employees. This compensation includes salaries, per-diems and certain benefits. Part VII of the Form 990 provides an overview of this compensation.
Schedule J of the Form 990 provides a detailed breakdown of compensation for certain individuals listed in Part VII of the Form. It may also include supplemental information, explanation or description of certain compensation.
For the co-op’s senior leaders and highest-paid employees, their compensation is detailed based on 1) base compensation, 2) bonus and incentive compensation (if provided), 3) other reportable compensation, 4) retirement and other deferred compensation, and 5) nontaxable benefits.
Certain retirement benefits may be paid when a senior leader reaches normal retirement age, even if the employee has not retired. In these instances, or upon retirement, the compensation section of the Form 990 may reflect a portion of the senior leader’s amount of retirement benefits received even though the benefit was accrued over many prior years. Co-ops may use schedule J and O to provide additional information regarding compensation, including retirement benefits. Unfortunately, some misunderstand or misrepresent this information.
Supplemental Form 990 Information: Schedule O
Co-ops use Schedule O to provide more information for responses to specific questions. Schedule O provides narrative responses to specific questions elsewhere in the Form 990 and to explain the organization’s operations.