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Your IRS Form 990 is More than Numbers, and Donors Are Looking

August 24, 2013

990On Friday the Community Foundation of Sarasota County hosted a free workshop about every nonprofit board and staff member’s favorite topic, the IRS Form 990.

Since your treasured 501(c)(3) status means that your organization’s assets are the property of the public, it is the job of the staff and board to be good stewards of those assets and to be transparent with an annual information return.

Organizations with gross receipts over $200,000/assets over $500,000 must file the standard Form 990. Those with gross receipts under $200,000/assets under $500,000 must file the Form 990EZ. And those with gross receipts under $50,000 must file the Form 990-N.

Thanks to our friends at Cavanaugh & Co, LLP who developed and led the session, understanding the form 990 in all of its glory was extremely helpful from the point of view of a donor.

The Form 990 focus is on transparency, but like your Giving Partner profile, it can be a splendid storytelling tool if used to the max.

Here are 5 key takeaways from the workshop:

  1. Invest some time in sharing your impact on the Form 990. Use the daylights out of Schedule O to write about the program accomplishments of your organization. (Tip: You already have this text prepared for the program section of your Giving Partner profile. Repurpose your time and efforts!)

  2. Involve your team in the IRS Form 990 preparation. The numbers may come from your treasurer, your CFO or your accountant, but you can put the skills of your grant writer, the “English major” on your board, or the marketing/development team to work on the narrative portions of the IRS Form 990.  (Tip: Give your draft 990 to an “outsider” who can review it for clarity and impact before you file.)

  3. For Pete’s sake, get those policies! The IRS wants to know if you have a Whistleblower’s policy, Document Destruction policy and Conflict of Interest policy. We also ask about them in The Giving Partner(Tip: We have sample policies if you need them.)

  4. Small nonprofit? Consider kicking it up a notch. If your organization has gross receipts under $50,000, you are only required to file the 990-N—the “postcard” that does not include financial information. Think about filing the 990 EZ instead. It will take a little longer, but this form will provide a donor with much more information about your organization.

  5. Emphasis on good governance is big. Nonprofit board members should not be engaged in activities related to your organization that materially benefit them (or their families) financially. Disclosure is important. Board members should review your IRS Form 990 before it is filed.

Many thanks to Steve Spangler, CPA and to Dave Hochsprung, CPA, partners at Cavanaugh & Co, for taking the time to share with us.

For a copy of their presentation, e-mail Susie@CFSarasota.org.

-Susie Bowie
Community Foundation of Sarasota County

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