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Tuesday, August 13, 2019

Telling Your Story Using the 990

Tax forms are not the most exciting documents, and the IRS Form 990 is no exception. In my role as Senior Program Analyst at Charity Navigator, I’ve reviewed thousands of 990s. I can definitely say that there’s only so many ways to make “Did the organization contemporaneously document the meetings held or written actions undertaken during the year by the governing body?” an engaging experience for the reader.

At Charity Navigator, we sift through the data provided in these forms to construct a financial and governance narrative for thousands of organizations, and this is reflected in the ratings available on our site. While our ratings provide donors a snapshot of an organization’s financial health and adherence to good governance practices, the rating itself does not tell an organization’s whole story. We look to supplement this narrative by providing mission statements, program accomplishments, and other information that is publicly available to donors. One oft-overlooked place for an organization to better tell its own story is none other than the 990 itself, and here’s how!

There are several questions on the Form 990 asking charities to tell the story of what they do, rather than just the dry financial report of how well they are doing and whether they follow best practices of accountability and transparency. Mission and program summary questions provide a window into the actual work being accomplished by a nonprofit. These questions are qualitative, rather than quantitative; unfortunately, many nonprofits do not provide more than bare bones responses to them. This inconsistency in the data provided makes the questions less useful for donors and stakeholders than they could be if charities viewed them as an opportunity to tell their story.

Recently, the United States altered its reporting requirements to require e-filing of tax forms for most large organizations. This change means that, for the first time, qualitative questions will be machine readable, and groups like Charity Navigator will have an opportunity to directly report an organization’s mission and programs as the organization has written and reported them on the 990. 

Given this change, Charity Navigator urges all organizations who file the Form 990 to consider these questions as an opportunity to provide better context for what they truly do. The story an organization can tell with their 990 can provide the details necessary for a potential donor to learn if the organization’s mission and programs resonate with them. Those details can be amplified through platforms like Charity Navigator, where automated data collection and presentation can help tell a nonprofit’s story just from looking at a tax form.

Here’s one example of a simple, yet effective, mission statement. Note the use of full sentence structure, the succinct statement of activities, and the narrative elements of expertise, dedication, and passion.

So, the next time your auditors or accountants ask for your books so they can craft your annual tax return, consider setting aside the financial spreadsheets for a second and embracing the opportunity to tell your charity’s story in even the driest of places. If nothing else, you may make an IRS employee’s day a little more interesting, and you’ll certainly brighten mine.  Together, we can make tax forms more exciting!

-Written by Kevin Doyle, Senior Program Analyst at Charity Navigator. Kevin helps manage the team responsible for reading and evaluating charity tax forms, so really he’s just looking out for their sanity when advocating for more interesting 990 content.

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1 comment:

Unknown said...

Your description of the value of the 990 reflects exactly the pitch that I have been making to our Board. I appreciate the strong echo of my comments. Thank you.

Ken Hall,
Board Member,
Students Helping Honduras