Use the Form 990 to Showcase Your Ministry

With easier access to the Form 990, this data will be used more frequently outside the IRS. Harriet Bograd and Peter Swords, with the Nonprofit Coordinating Committee of New York, suggest the 990 data will be used:

• Positive accountability. Potential donors, nonprofit board members and others can use the data to compare present and past financial performance, and to compare a group’s financial performance with others in its field. Even grantmakers may review your Form 990.
• Negative accountability. State charity officials, journalists, concerned board members, employees and others can all find valuable information to prevent or ferret out abuses.
• Research. The data will help scholars, practitioners and policymakers investigate questions relating to the overall nonprofit sector or segments within the industry.

Focus on Part III of Form 990. Use the "Statement of Program Service.
Accomplishments" (Part III) of Form 990 to fully demonstrate the effectiveness of your organization. This is where you can rescue the bottom line from the accountants and the IRS. A year’s accomplishments cannot be defined primarily in fiscal terms. Highlight your program services in away to convince potential and current donors that the services performed are worthy of their contributions.

Highlight your programs. Each of the organization’s largest program services should be fully described in Part III.

Simply insert: "See attachment," and on the attachment take all the space you desire to describe your program services. You should generally provide much more information about program services.

What if your organization has more than four programs? List all of them in your attachment referring to Part III.

Demonstrate accomplishments. What are you accomplishing in the community, the region, the state, the nation, or the world? Illustrate how your program services relate to your charitable purpose. Provide appropriate detail on activities and projects.

Quantify results. Reflect the number of persons who benefited or the service outputs from each of your activities, if possible. How many meals were fed to the homeless? How many therapy sessions were conducted? How many publications were issued? If exact numbers are not readily available, reasonable estimates for the statistical information can be used.

Utilize Part VI to your benefit. The value of volunteer services or gifts of materials or facilities or less than fair market value does not go in Part I or II, but it may be a valuable bit of data listed on line 82.

Explain your exempt function income. Part VIII provides you the opportunity to explain how this income supports your cause. You are not limited to space provided on the form.

Justify data that may raise questions. Are your fund-raising or general and administrative expenses relatively high in relation to program costs? The public tends to be preoccupied with fund-raising and general and administrative percentages. But these expense levels will be different for different organizations, often for legitimate reasons. Use Form 990 to explain why certain costs are relatively high.

Example: An older, established ministry with an established donor base which contributes regularly is not as likely to require as much fund raising as new organization that is trying to get its mission before donors.

Is the salary of the CEO relatively high? "Include a summary job description, describe the process used by the board to review the CEO’s performance, and establish and document that the compensation is reasonable," says Chip Watkins of Webster, Chamberlain and Bean.

Did you report related financial transactions with ministry officers and employees (loans, purchases, leases and the like)? If so, explain the steps the organization took to insure that the transactions were reasonable.

Continue to use your annual report. Many charities prepare and distribute an annual report. The annual report can be a powerful communication vehicle. It can present the full audited financial statements plus any other detail or analysis you wish to provide, including Form 990 data. Your organization fully controls what goes into the annual report.

Summary. On Form 990 and in your annual reports:

• Keep the reader’s focus on your vision and mission and how you effectively use donations.
• Communicate about what you do, why you do it, and the results of those efforts.
• Go beyond describing what you do to describe what happens as a result of your efforts.