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Financial
Mar 27, 2017

IRS Form 990: A Tax-Exempt Organization's Opportunity For Success

Sponsored Content provided by Chad Wouters - Partner, Earney & Company, LLP

This Insights was contributed by Sandy Crumrine, CPA, CIA, an audit partner at Earney & Company, L.L.P.

Upon formation, most not-for-profit organizations must begin filing the IRS Form 990, “Return of Organization Exempt from Income Tax.”

Form 990 is the annual information return for tax-exempt organizations, including charities, fundraising organizations, civic leagues, social clubs and other organizations, as described under code 501(c) of the Internal Revenue Code. The type of 990 form an organization must file depends on its financial activity.

Compared to other tax returns, Form 990 is unique in the way it reports extensive information on operations, programs and governance. Not only does it contain financial data, but it also has written narratives and opportunities to provide supplemental information, all of which is made available to the public.

With that in mind, filing your organization’s Form 990 can be a great marketing tool.

Tax-exempt organizations can capitalize on their annual 990 filing requirement by using the 990 to educate donors (current and prospective) and market their programs. Prospective donors, whether they’re investing money and/or volunteer hours, want to know their participation and contributions are put to good use.

To establish a comprehensive brand image that will maintain the support of current donors and capture the interest of prospective new ones, consider the following:

  • What kind of audience do you want to attract? Some members of the public - your clients, donors, citizens in the communities you serve, etc. - rely on Form 990 as their primary or sole source of information about an organization. If you have new funding that requires a financial audit, CPAs will look up the organization’s most recent Form 990 to learn more about its operations and viability. If you apply for a grant, part of the award selection process involves reviewing Form 990 to determine whether the mission and accomplishments are aligned with the purposes of the foundation grants.
  • Establish a comprehensive and descriptive organization mission. The front page in Part I, Line 1 of Form 990 is where you will describe your organization’s mission. It is one of the first pieces of information readers of your 990 will see, so make sure it summarizes the purpose of your organization in a brief but accurate and descriptive way.
  • Work with your marketing team and/or communications director to make sure the language used throughout the return integrates the organization’s communications materials (information on the website, annual report and fundraising appeals).
  • Take advantage of the Statement of Program Service Accomplishments in Part III of Form 990, which is where an organization can describe how it achieves its mission. Do not be afraid to use the section to brag about your organization’s accomplishments. The more specific quantitative information about your organization’s accomplishments the better.
  • Just because an organization is not required to file, it can voluntarily file Form 990. Filing shows donors and constituents that your organization goes beyond the minimum requirements.
How the public perceives an organization can be determined by information present on its Form 990. Do not miss the opportunity to publicize your organization’s accomplishments and attract support for its cause.

Chad Wouters, CPA joined Earney & Company in December 2006 and became the tax partner in November 2013. With an emphasis on strategy and planning, Chad works with his clients all year to ensure the most efficient tax strategies are put into place.  Earney & Company, L.L.P.  is a CPA firm that handles tax compliance, consulting and planning as well as audit and other assurance services.  For more information please visit www.earneynet.com or call (910) 256-9995.  Chad can also be reached at [email protected].
 

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