Are you adequately using your most public marketing tool?

The IRS Form 990 is available to the public via the Internet at http://www.guidestar.org/. Once on Guidestar, it is immediately transformed from a basic tax return to a marketing piece.  This is even more so with the emergence of the IRS’s 2008 revision of Forms 990 and 990-EZ, aimed at facilitating greater accountability and transparency in organizations’ filings. The added significance may make 990's more time consuming to complete, but it also provides an additional way to demonstrate your accomplishments and responsible stewardship of public dollars. It is an opportunity to show the public the most complete picture of the organization’s financial history and reflects the actions and decisions of the organization.

There are two sections of IRS Form 990 that nonprofit organizations use to give exposure about their programs to potential contributors: 

• Part III: Program Service Accomplishments
  Here’s your opportunity to describe in detail your achievements, yet many organizations simply list a program name and dollar amount. Be sure to describe what you did, using as much accurate detail as possible, with the number of participants served for example, or the percentage increase in the growth of the program, as well as, detailed program outcomes. The return provides space to describe the three largest programs with only a few lines for descriptions. Additional information can be continued on Schedule O. Many organizations include up to a full page of valuable information for the public eye.
• Part IX: Statement of Functional Expenses
  This section requires you to report expenses either as program, administrative or fundraising expenses. Typically, administrative and fundraising account for up to 30% of total expenses, yet many organizations under-report fundraising because of the fear they'll be judged negatively for spending money on it, especially if a campaign was unsuccessful. On the contrary, the number one complaint of the media, watchdog groups, state regulators and potential contributors is that organizations misrepresent fundraising costs. These include:
• Personnel expenses based on the percentage of time spent fundraising or overseeing fundraising activities
• Printing, postage, phone and computers used for fundraising activities
• Fees paid to outside fundraising consultants

If you have questions about completing these or other sections of your Form 990, feel free to contact one of our nonprofit experts. To learn more about how we can help improve your financial reporting and performance, visit our CPA Services section.