What Story Does Your Organization’s Form 990 Tell?
The IRS Form 990 is a publicly available document and is posted on various charity rating websites such as Guidestar and Charity Navigator. You may even post it on your organization’s website.
Here are three ways you can revamp your Form 990 to better tell your organization’s story:
Program Service Accomplishments
Page 2, Part III of the Form 990 requires the organization to describe its program services accomplishments. We suggest using this as a place to share qualitative and quantitative information about your programs and how your organization is carrying out its mission. Involve your development department to help craft the appropriate language to best describe your programs. This is the place to tug on heart strings and also provide data to share your impact in your community.
Governance and Policies
Best practices and state charitable regulations dictate some requirements for the governing body of not-for-profit organizations. The IRS gathers data about the governing body and management of the organization in Part VI, Section A. Review this part to ensure your organization has appropriate governance structure in place and is following best practices. The IRS encourages not-for-profit organizations to have in place all of the policies included in Part VI, Section B. Additionally, it is important to know what factors charity rating websites, such as Charity Navigator, use to rate your charity. Many of the items used to arrive at the rating come from the Form 990 including items in the governance and policies sections. If your organization does not yet have all the policies in place outlined in Part VI, Section B, we recommend working to add those policies over time so you can maximize your rating.
Functional Allocation of Expenses
Many users of the Form 990, including donors and charity rating organizations, will use the information reported in Part IX Statement of Functional Expenses to evaluate the financial efficiency and performance of the organization. This stresses the importance of reviewing the allocation of costs between program service expenses, management and general expenses, and fundraising expenses. Review your allocations to ensure you are allocating costs appropriately and not defaulting to classifying costs as management and general that may have a programmatic component.