IRS Form 990 includes specific information that helps donors and watchdogs assess and monitor nonprofit organizations. In a single document, it provides a snapshot of the financial health, governance, and operations of a nonprofit.

Form 990 gives nonprofits an opportunity to tell the story of how they are fulfilling their mission and objectives. In addition to financial details like revenue, expenses, assets, and liabilities, the form also communicates the following information to donors and watchdogs:

Executive compensation: The total compensation package of your organization’s highly compensated employees is included on Form 990. Sometimes these numbers may raise eyebrows among donors and watchdogs, but they should be viewed in the context of similar nonprofits and the executives’ responsibilities compared to similar roles in the for-profit world.

Fundraising fees: Any costs the nonprofit incurs during fundraising must be included on Form 990. Donors and watchdogs may compare this amount to the amount of money spent on programs.

Programs: This section will detail which specific programs are being put on in an effort to fulfill its mission. Donors and watchdogs may want to see how much of every dollar raised is going to programs compared to administrative costs.

Mission and vision: Some nonprofit executives view Form 990 as simply a financial and tax reporting form, but it’s much more. The narrative section presents an opportunity for nonprofits to share their mission, vision, and values with donor audiences. In this way, Form 990 can serve as a marketing tool for your organization.

Contact us if you have more questions about IRS Form 990.

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Our firm provides the information in this article for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this blog are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.




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