Nonprofit Form 990: Friend or Foe?
This blog entry was first published as a guest entry on Bloomerang.co.
It’s such a pain filing my government required Form 990 each year - does anybody even look at it anyway? Nobody asks me for it. I’ll just file an extension!
Busy Executive Director
When I started in nonprofit years ago I had no idea what a Form 990 was - all those numbers and check-boxes seemed like a lot of painful information for someone to fill out. Frankly, I didn’t understand what most of it meant. I’ve put off filing because of “more important” business and have admittedly filed a few extension myself.
But that was before I understood the importance of this little gem of a document.
You want your donors to see you as a transparent partner, right? You want them to see how well you are spending their donation, right? And you want these same donors to give every year because they understand how well you’ve used their money, right?
That is what a Form 990 does.
In addition to the 9,000 other hats you are wearing as an Executive Director, you need to be an expert about the business side of your nonprofit. I want you so comfortable with how you are running your business and its finances that you actually want to show off and forward your Form 990 to donors. I want you to be able to speak to the growth of your organization with confidence because your words are backed up by a document online that you voluntarily and actively send to your donors.
OK - here’s the catch. No more extensions.
This is a growth move and mindset.
Here is why. We all know your organization's Form 990 is due on the 15th day of the 5th month after the end of your organization's taxable year. This means that if your organization follows the calendar year (January 1 – December 31), your Form 990 would be due on May 15th of each year. So, your fundraising year is nearly half over when the form is even due.
You’ve got to have your numbers completed and submitted so that you can actually use them this year to fundraise - to have meaningful growth conversations with your top donors who can and want to invest in your growth. Complete it on time (dare I say early or as early as possible?) so that you have the opportunity to use it during the following year. Otherwise, you are forced to send back up financials to individuals that are 18 - 24 months old - and many individual donors don’t understand the timetable. It appears like you are sending old numbers to them and they perceive you to be outdated.
This approach takes planning. But guess what? You can do it!
Using the sample organization's timeline with a May 15 deadline, in December before year-end, call a meeting with your financial management team (bookkeeper, auditor, CPA, finance chair, etc.) and plan out the process. Make sure the entire team knows you will not be filing an extension and that you want to file in March or April (there will be a lot of moaning and probably a little panic - push through it).
Next - carve out time in your calendar for the data-gathering. Only you can make time for this!
Own the process. Learn from it - ask good questions along the way. This will help you during your meetings with your top donors this year.
This is the approach I adopted and took years ago in Nonprofit - and today I see it working for my clients. This approach will set you apart from your competition. You will hear donors say “Wow, I’ve never seen this before!” What that really means is “nobody bothered to show me the true, public financial back-up as to how you are using my money.”
This, my friends, is what donor retention looks like.
Whenever you’re ready, here are three ways I can help you.
1. Get FREE TRAINING. Discover the proven system that consistently raises more money to fund your mission every year. And perhaps more important, learn the things that are keeping you from growing and making it harder for your donors to give! Register here.
2. In the next 90-days, learn how to secure larger donations for your mission. If you want to move into mid- and major-level individual gift programs for your nonprofit, but you’re not sure what your next step is, I can help. Just email me here and put "Donors" in the subject line and I’ll get you the details.
3. Work with me privately. If you'd like to work directly with me to level-up your current development process and grow your charitable revenue tremendously, just email me here and put "Private" in the subject line. Tell me a little about your organization and what keeps you up at night when it comes to your funding, and I'll get you all the details.