Form 990 is a required filing for many nonprofits and, importantly, offers a lot of room to go into great detail about the organization. That is important because the forms are accessible to the general public. This makes 990 a mechanism for connecting with, and passing on, information to the general public, as well as donors, board members and volunteers. In addition, rating agencies such as Charity Navigator rate nonprofits based on information reflected in the 990.
“It’s not just a required filing,” says Herzl Ginsburg, a senior manager at Ciuni & Panichi, “it’s also a messaging instrument for nonprofits.”
Smart Business spoke with Ginsburg about how nonprofits can maximize the opportunity Form 990 offers.
Why should nonprofits detail their accomplishments on the 990 form?
The 990 offers an opportunity for nonprofits to detail their program accomplishments and present supporting metrics for everybody — the general public, resource providers, ambassadors, board, staff, volunteers — so they can all reference these accomplishments as they talk with their community and their peers. It shows a nonprofit’s value and why it’s important for others to support it. Not every organization needs to go into great detail about their accomplishments on a 990. In some cases, a nonprofit is not relying on the general public for contributions — its funding comes from other sources. But for nonprofits that do rely on the public for donations, it’s important to take full advantage of the opportunity.
How can answers to the governance and policies questions on the 990 offer insights as to areas for improvement?
The nonprofit’s Board, in its role of governance, should review the 990. The 990 has a number of questions related to governance policies and procedures. For example, whether or not the organization has a whistleblower policy is a ‘yes/no’ question on the 990. The Board may view the context of this and other questions as best practices. Any ‘no’ responses should be evaluated as opportunities for implementing a best practice and how the omission of a particular policy may be viewed by stakeholders.
Why should nonprofits talk with their tax preparer ahead of the filing?
In general, communication allows for a smooth process and an opportunity for highlighting changes to the form 990 and addressing questions a nonprofit may have around them. More than that, every so often a nonprofit will have a non-recurring change, such as offering a new program or making a change of leadership, which will get reported on the Form 990. Discussion around these types of changes allows for time to plan how best to capture them on the form, reporting them accurately while recognizing that the Form 990 is telling your story to your stakeholders.
What should those who have paid tax under the parking tax regulations through a 990T know now?
There was a period of time when employer-provided parking benefits by tax-exempt organizations would lead to a tax on an organization. Nonprofits were filing a 990T to document that expense. Congress repealed IRC Section 512(a)(7), which was imposing the tax on nonprofits, retroactive to 2017. Nonprofit organizations should be filing an amended 990T for the years the organization paid this tax to get their refund.
What is the importance of reviewing and monitoring Charity Navigator and GuideStar profiles?
More donors and supporters are looking for information about organizations, and Charity Navigator and GuideStar are two of the resources that are often used. They use available information to rate organizations relative to other nonprofits. Organizations should look into what else is going into these ratings that could be changed to improve them. Potential donors are using these resources to determine where they allocate their support, so understanding the ratings and exploring what opportunities there are to improve those ratings is very important for governance of the organization.
The 990s are more than just required filing. They present an opportunity for organizations to spread their message and begin to make the case for contributions.
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