Balancing the Mission Checkbook

IRS 990: What’s in it for me?

When nonprofit organizations complete the IRS 990, the standard federal reporting requirement for nonprofit organizations, most probably aren’t thinking about how they will use the form. The 990 is essentially a compliance document, explaining to the IRS the mission, governance, program activities and financial situation of an organization for the prior year. The IRS uses the form to not only make sure the organization still exists, but also to check to see that the organization is meeting the rules for charities, and basically doing the things that it said it would do. Many organizations view the annual filing of the 990 as an administrative task to check off the list every year.

The IRS isn’t the only organization that wants to see 990s. Funders are interested in them too. Many grantmakers require nonprofit organizations to submit their 990s as part of the application process, verifying the programmatic and financial activities of the organization. It’s especially common for funders to ask for 990s when an organization is below the budget threshold for which an independent audit is required.

It seems like nonprofits are just filling out 990s for other people, right? Whether it’s the government or funders, 990s seem to be the tool for everyone else EXCEPT the nonprofit to use. So, what if nonprofits asked, “What’s in it for me?”

The 990 is actually full of useful information about your organization. It’s one of the few documents where we write down in one place everything about our organization, from our mission to board members to program descriptions to finances. If you want one place to go to find out pretty much everything about your organization, the 990 is it. We’ve blogged before about some of the ways you can put the 990 to use for your organization.

If you really want to make your 990 work for you, you’ll need to do some analysis of the finance section of the form. Unfortunately, it’s not always clear what to look for on the 990 if you are interested in understanding the overall financial health of the organization. The financial information isn’t presented in the way that nonprofit organizations are used to seeing, which can make analysis difficult.

That’s why Nonprofits Assistance Fund created the IRS 990 Decoder. This worksheet helps you do the analysis by creating easy to use reports from the information you input from your 990. The worksheet also calculates some key ratios which can help you identify trends, establish benchmarks, and recognize strength and areas for focus. Download this one-page resource along with the worksheet to get started.

Whether you just completed your 990 or know it’s due soon, think about what’s in it for you. Use the IRS 990 Decoder to see what else the 990 can tell you about your organization.

Stephanie Jacobs is a self-proclaimed nonprofit nerd who loves to think, talk, dream, and blog about nonprofit capacity building.