How Nonprofits Can Use the Form 990 to Attract Donors
Did you know the Form 990 isn’t just for IRS compliance? It’s a powerful storytelling tool that can help nonprofits highlight their impact and attract donors. In this episode of Entrepreneurs Playbook, PKF Texas’ Fatima Chase, Senior Tax Manager and Approachable Advisor, joins Jen Lemanski to discuss why the 990 is so important, what nonprofits should include, and how to make their filing stand out.
Transcript Below
Jen: This is the PKF Texas – Entrepreneur’s Playbook®. I’m Jen Lemanski, and I’m back again with Fatima Chase, one of the Approachable Advisors® on our PKF Texas Not-for-Profit team. Fatima, welcome back to the Playbook.
Fatima: Thanks for having me back.
Jen: Yeah. So not for profits. The big thing is every year they’ve got to file the 990.
Fatima: Yes.
Jen: So can you give for our viewers who may not be as familiar, can you tell us a little bit about what a 990 is and how the not for profits use it?
Fatima: The 990 is an annual information return that the public charities are filing with the irs, detail the organization’s activities for the year. And it’s a little different from a business return in that business returns are mainly to report taxable income, while the 990 is not just for the income, expenses, and assets, but how those are used to conduct the programs that are furthering the organization’s mission. Additionally, the 990 is a public document, and it’s not just for IRS compliance. It’s used by donors as a tool to determine where they want to share their charitable dollars.
Jen: That makes sense. So are there things not-for-profit should put in their 990 to make it a little bit more attractive to donors? Like, does that impact their giving?
Fatima: Oh, absolutely. So you want to tell your story. The Form 990 provides space so that the organization can tell what it’s done and how it’s been impacting the public. It’s a huge opportunity to highlight the great things that they’ve been doing during the year. It’s also a way to tug at the heartstrings of those new donors that are a little indecisive about where they want to share their doll, and then it can confirm with current donors that it was a good choice for them to donate to that organization to begin with. You would put it on the Form 990 on page two, part three, but there’s more space, so you don’t have to stop there. You can put it on the schedule, all the supplemental information. So I encourage the organizations to take advantage of that.
Jen: So it sounds like there’s a lot of opportunities for the organizations to really spotlight what they’re doing, the impact that they’re making, and even position themselves for growth. Is there anything else that somebody should consider when they’re filling out the 990?
Fatima: So I’ll give you an example. So say you’re an organization that’s created to provide mentoring or educational resources for an underprivileged community. Okay. So you will want to let the people know that last year you mentored over 200 students or through your tutoring services, you’ve seen how the test scores for the schools have gone up or that graduation rates have increased. And you want to use numerical facts. You want to use percentages. You want to use things that are going to get the reader’s attention.
Jen: So if donors are doing their research, they can go to irs.gov and there’s a lookup tool. Are there any other resources that they could find?
Fatima: Oh, yes. So we typically use guidescar. It’s now being called Candid. But there are other options to use to find a 990 to review.
Jen: Perfect. Well, we’ll get you back to talk about some more not-for-profit topics. Sound good?
Fatima: Yeah, I look forward to it.
Jen: Great. This has been another thought leader production brought to you by PKF Texas, the Entrepreneur’s Playbook. For more information about this and other topics, visit pkftexas.com/notforprofit. Tune in next week for another chapter.
