Nonprofit Tax Return is Free Advertising — Direct to Donors

Ben Harris, owner of Numberman LLC

Ben Harris, owner of Numberman LLC, can help your nonprofit use the 990 as free advertising.

Think of your nonprofit’s 990 as free advertising.

The 990 is the annual Federal tax return that nonprofit corporations file. It contains a wealth of information about a nonprofit’s activity in the previous year. Many donors will refer to them to make decisions about where to contribute. Charity watchdogs, acting like nonprofit ratings agencies, will analyze key figures and grade organizations based on their 990 returns.

Knowing this, you can use the non profit tax return to your advantage and “advertise” directly to donors. Not every org must file a full 990 but doing so will allow you to brag a little and tell the world just how you make it a better place.

Types of 990s

There are three variations of the non profit tax return: 990, 990EZ, 990N. Which one is required depends on the amount of revenue and net assets the corporation has at the end of the year.

990N

Also known as the “990 Postcard”, this is super simple and may work for nonprofits with gross receipts normally less than $50,000.

990EZ

This is known as the “Short Form.” It may work for nonprofits with Gross receipts less than $200,000 and total assets less than $500,000.

990

This is the “Long Form” and is for nonprofits that have Gross receipts equal to or more than $200,000, or Total assets equal to or more than $500,000. This long form contains the most amount of information about the organization.

Public Documents

990 and 990EZ are public documents! IRS tax law states that nonprofits must make their 990 and 990EZ available for public inspection and copying. Some organizations post it on their website. The majority just provide it when asked. Perhaps most importantly, nonprofit watchdogs make 990s available through their services.

Charity Watchdogs

A charity watchdog is an independent organization that evaluates charitable organizations. They collect and post 990s and/or the data on their websites. Three of the main main databases are GuideStar, Charity Navigator, and the Better Business Bureau Wise Giving Alliance. All of these will analyze and rate the effectiveness of a nonprofit’s mission based on annual returns. GuideStar makes 990s available for each nonprofit it rates.

What’s in a 990?

The information reported in a 990EZ and 990 is more than just financial. There are sections that report on mission objectives and accomplishments, oversight, internal procedures, board of directors, largest donors and more.

The majority of 990 users are current and potential donors. Nearly all donors, from individuals and philanthropists to governments and foundations want to know the how well their donation will benefit the world. They regularly refer to the 990 for this information.

Don’t just file a tax return but brag a little. Here are some sections of the 990 where you can shine!

Revenue and Expenditures

Page 1, front and center. Like other returns, this tells the company’s performance over the last year. While its important, this section may not have the most impact in regards to attracting donors.

Program Service Accomplishments

This is where you get to tell what your organization did. An organization will describe the previous year’s activities. It states the primary exempt purpose, and will describe in detail the four costliest programs. This is where you answer the questions:

  • What were the accomplishments?
  • How many people were served?
  • How did you make the world a better place?

Board Members

This can matter to some. After all, its about who you know. Donors can wonder who sits on your board? Are these well known members of society? Are they people that can guide the nonprofit well?

Statement of Functional Expenses

This will tell how much was paid for each program. It will also go into how much was spent on Administration. In other words, how much of the revenue actually went to the mission. Red Cross lost a lot of donors when it was discovered they mismanaged funds and spent $1.25 Million, a quarter of the funds donated after the 2010 Haiti Earthquake, on internal expenses. This shouldn’t happen, don’t be like Red Cross.

Balance Sheet/Financial Position

This reports the details of the assets and liabilities a nonprofit has. What does it own and who does it owe? A company of any kind won’t last long if its assets are not able to cover its debt. This can also provide insight to income received but is not able to be spent, for example, endowments or restricted grants.

This is not a complete list. Just know there is tons of information to be found at Numberman LLC. Contact us. We can walk you through your 990 options and help you use this tax return as free advertising for your nonprofit.

Now you know that the 990 is available to all and donors are the main users. Use the 990 to get free advertising and showcase your organization. Tell them what they want to hear — that you are awesome!

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