Form 990 – Not Just a Tax Return

Blog by Dan Billingsley, Vice President of External Affairs

Your 990 is not just a tax return, it is an important tool to tell a story about your nonprofit. And while it presents important financial information, it’s a way for the public to engage with your organization.

Financial Tool

The 990 is a financial overview of your organization’s fiscal stability. Over time (say three to five years), it can give the public a picture of your growth, changes in funding and increases in your programmatic cash outlay. This gives donors a perspective of your organization that helps to paint a picture beyond just your program descriptions and outcomes.

Transparency Tool

Most importantly, the 990 is your organization’s tool for transparency. It lets the public know about your governance, your fiduciary position, and so much more. Your board list is public, your highest salaries are listed, expenditures on your programs are outlined, and if you lobby, that information is available to the public. Schedules within the 990 also let the public know if you have related staff and board members, those salaries, whether or not you compensate board members, etc. We recommend that you post at least three years of your 990s on your website even though these documents are also regularly available through Guidestar.

Marketing Tool

Many of us don’t realize that the 990 is actually a good marketing tool for organizations. We can use it to not only describe our programs, but link those outcomes to the financials within those 990s. In addition to our annual reports, websites and other materials, the 990 can give even greater perspective of program effectiveness and efficiencies with the information contained within its dense pages.

One Caveat

A 990 is not exactly “easy to read” which is why nonprofits should be educating their staff and board about what is within their pages. However, the general public doesn’t normally understand how to read a 990 which is why you should also pull out pertinent information from the document and put it into something easy to understand for the general public (such as percentages of administrative, fundraising and program expenses along with explanations).

We encourage you to come to our 990 trainings so that YOU can learn more about this most important financial tool!

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Nonprofit LeadersMarnie Taylor