The Form 990 financial report is an opportunity for nonprofits to tell their story. The purpose of this report is to provide information about the mission and programs of the organization. It serves as an important marketing tool for the organization. In addition to reporting on financial data, the report can also provide information on the organization’s accomplishments and programs.
The IRS requires nonprofit organizations to file a Form 990 annually. It summarizes their revenue, expenses, and net assets. To prepare the report, organizations must have a good accounting system, which allows them to extract all necessary financial data. The preparation of the Form 990 can be time-consuming and expensive.
The IRS 990 is a public document that gives donors a complete picture of an organization’s activities and financial performance. Many donors make decisions based on this information. The form is lengthy and requires a great deal of information. It also comes with hefty penalties if an organization fails to file a Form 990.
In addition to providing information about nonprofit finances, Form 990 documents answer important questions about the organization’s mission and governance practices. These reports can help the IRS enforce its not-for-profit laws. They show if the organization is operating within the terms of its exempt status and has been compliant with federal tax filing requirements.
The IRS has changed its regulations regarding Form 990 to make it available online. As of June, Forms 990 can now be accessed electronically. Organizations must ensure they update their information every year so that they can make sure it is accurate and up-to-date. However, not-for-profit organizations must not assume that no one will read their Form 990. Many donors research nonprofit organizations before donating to a cause.
In addition to preparing a Form 990, nonprofits must also provide an explanation of any variances in revenue and expenses. If the numbers in the financial report do not add up, contact the organization’s management to receive a clarification. As a rule, organizations must also perform an audit in conjunction with the Form 990.
Part VIII of the Form 990 includes information about in-kind contributions of property and services. In-kind contributions should be reported on Part VIII, line 1g. On Schedule B and Schedule M, non-cash contributions should be reported in column (c). Regardless of the type of contributions, organizations should report all donations of in-kind property and services.
The Form 990 is a complex document, and should be read carefully before filing. If your organization has less than $50k in gross revenue, you can use the Form 990-N, which only requires minimal information. The Form 990-N is an “e-postcard” form and can be filed online.
When writing the narrative section of the Form 990, make sure to use clear and convincing language. It is common for nonprofits to use jargon or terminology that their audience may not understand. A well-written Form 990 can be an effective marketing tool for your organization.