Annually, nonprofits must file the appropriate type of Form 990 tax return (990-N, 990-EZ, 990) with the IRS based on the organization’s gross revenue and net assets. When is the last time you read the entire tax return and thought about how the return portrays your organization? What would a potential donor think if they read the organization’s tax return online through sites such as www.guidestar.org?
The 990 provides a snapshot of the organization by including the following:
• The organization’s mission and how funds are spent to support the mission
• Major programs of the organization and how much is spent on each program
• Income received and the sources of that income
• Restrictions imposed by donors on the organization’s assets
• Expenses allocated between program, management and general, and fundraising
• Salaries for the highest paid staff members, if applicable
• Board members and their compensation, if applicable
• Increase or decrease in net assets over the last year and factors that contribute to this change
• Board oversight in place
• Policies and procedures in place to reduce the risk of fraud
In addition to the reporting requirements on the 990, one can include any supplemental information desired on Schedule O. If the organization had a particularly tough year due to state grant funding but found other revenue sources for the upcoming year, explain this in Schedule O. If the organization has a reserve, feel free to explain the purpose of this reserve and how these funds may be used in the future. Schedule O can also be used to more thoroughly explain activities or projects the organization held throughout the year. Is there anything else you want current and potential donors to know about your organization that isn’t already disclosed? If so, feel free to disclose as the 990 is an opportunity to positively portray the nonprofit organization.
Take the time to read your 990 thoroughly! The 990 is another valuable way for you to share the story of the great things your organization is doing in your community and to let donors know why you need them!
If you have any questions about your organization’s 990, contact the professional at Gilliam Bell Moser LLP