A nonprofit’s 990 form doesn’t just help maintain tax exemption with the IRS—it’s also a crucial lens into an organization’s financial activities, goals, past successes, staff, and more.
Stakeholders often rely on a 990 document to make informed decisions about their involvement with a nonprofit.
For charitable organizations, this level of transparency can feel like a huge pressure to perform. Yet, it can also be a major asset.
Whether an organization is big or small, the goal is always to draw people in.
The 990 form serves as a sales point, a pitch to get people excited and invested. This is a way to display your wares to the people browsing the nonprofit marketplace.
Think about it from the point of view of a potential donor, volunteer, or other stakeholder, and imagine you’re being asked to give your valuable time or money to an entity that won’t reveal how it spends its money or pays its staff.
What incentive is there to take on that high level of personal risk? Would you work with that nonprofit?
The answers are: none and very likely not.
Therefore, it can be a useful exercise for nonprofit financial officers to put themselves in their stakeholders’ shoes.
Who exactly is looking at your nonprofit’s 990 form? Why?
First, Some 990 Form Filing Basics
To maintain tax-exempt status, 990 forms are due the 15th day of the 5th month following the end of the organization’s taxable year.
Use this IRS 990 filing timetable to figure out when your filing is due.
If you are filing a form other than a 990, those forms will have deadlines listed in their instructions as to filing due dates.
A Rundown of Common 990 Forms:
You file the digital only Form 990-N if your organization has gross receipts less than or equal to $50,000
You file the Form 990-EZ if your organization has gross receipts less than $200,000 and total assets less than $500,000.
You file the full Form 990 if your organization has gross receipts more than or equal to $200,000 or total assets more than or equal to $500,000.
How to File
Prior to the new law taking effect, 990-N is required to be submitted electronically, while 990 and 990-EZ can be submitted either physically or electronically.
Physical filings can be mailed to:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027.
Donors Want to Make Responsible Decisions—and for Nonprofits to Do the Same
From a responsible donor’s perspective, a lot goes into a decision to give. They may look at a variety of giving options before settling on an organization to contribute to.
There are a variety of factors that influence individual donors. They might feel a personal connection to certain causes such as education, animal welfare, human health services, the arts, or any number of things.
However, one commonality among them is that if a nonprofit is not transparent with their finances and operations, they’ll be quickly discarded.
Here are some of the factors donors look for when it comes to charitable giving.
Likely many donors will want to know about your overhead. This will help them figure out if you’re financially responsible versus being grossly negligent—but we’ll assume that you aren’t.
While overhead alone doesn’t give a complete picture of your management practices, perspectives will still want to assess management and financial practices.
Your 990 can give donors insight into your past contributions, expenses (program service; management; and fundraising), net assets, and other financial data, but also organization management info such as:
- Major program services funded
- Governance, management, and disclosure
- Employee structure and compensation
Donors will want to know that they’re giving to an organization that is current on its tax-exempt status. The 990 document offers reassurance that a nonprofit is legitimate and maintains tax exemption with the IRS as a charitable organization.
Ensure your nonprofit is tax-exempt and hasn’t had its status revoked due to missed filings. Your organization should be listed in the IRS tax-exempt organization search tool.
Donors will also want to know whether their gifts are tax deductible. In the case of 501(c)(3)s, this is usually the case. But there are exceptions. Make sure this information is clear to them.
Your Missions Align
This is perhaps one of the most crucial things when it comes to attracting donors. They want to see that you’re spending funds to further the mission and achieve related goals.
A shared mission translates to shared values, which gives donors a sense of connection to the organization to which they’re giving.
Giving Them a Reason to Learn More
It’s been said that a 990 form is like a resume. You’re giving donors a snapshot into your credentials. However, it can also entice them to want to learn more. This means they’ll do more research. They’ll want to see your website and literature.
The more informed donors are, the more likely to give.
Who Else Is Looking?
There are a number of other stakeholders who may be interested in viewing your 990 forms. What about foundations or corporations when seeking grants? How about potential volunteers? Or the public at large?
Being transparent with the wider community helps keep your organization in good standing and more likely to attract good will.
Form 990 eFiling
When filing online, a certified eFiler can help as a professional, streamlined, affordable service to ensure you meet your filing deadline every single year. Use a reliable eFiling service like File 990 to ensure your potential donors always have access to the latest filings.
Here’s how File 990’s services will help your nonprofit:
- Secure annual e-filing for 990-EZ and 990-N forms
- Automated reminders when it’s time to file
- Storage of data from previous years, to make filing easier
- Optional enterprise suite to track and remind your multiple components or chapters to file
- Group filing option for 990-N forms.
Have questions about your 990 filing or want to learn more about our e-filing services? Call us at (859) 309-3641 or email email@example.com.