By Joyce Underwood, CPA
The Form 990 plays an important part in communicating your nonprofit organization’s mission and accomplishments to the world, and is also a key means for promoting your organization. Filing the Form 990 satisfies your tax compliance requirements, but it is also a public document distributed widely and manipulated by third parties on an ever-increasing basis. Ensuring information in your Form 990 is accurate and conforms to your other communications about your organization is important.
You want to ensure the messaging agrees to your website and social media communications, and conforms to your intended public image. You can describe your organization in a way to attract a certain type of supporter, or speak to an intended generation of donor. You will also want to describe your accomplishments showing effective outcomes, and consider if you want to focus your message on the giver or on the receiver of your resources. These days, more and more donors seek to support organizations with which they find a personal connection, and demonstrating outcomes is one of the most effective ways of showing the progress and impact your organization is making, which helps to create those connections.
The first page of the Form 990 (Part I, line 1) is intended to highlight the organization’s mission or most significant activities in condensed form. You should be direct but brief here, providing succinct wording to describe the organization. Page two, the Statement of Program Service Accomplishments (Part III), is where you can shine. Part III requires more detailed information about the mission and activities, and provides an opportunity to further promote the organization and capture interest. The mission described here should reflect the language in the approved mission adopted by the governing body, either initially or through amendment.
It is important to communicate to the Internal Revenue Service (IRS) any discontinued, changed or new activities, as your tax exemption is dependent upon your approved mission and activities. Should your mission or activities evolve over time from their original intent and not be communicated—or remain appropriate for your status—you could have tax exemption issues.
Organizations are also required to describe the top three program activities, as measured by expenses, and list any other programs carried on. You can describe all program activities, if you prefer. Even if you’re not a public charity or public welfare organization, which are required to include the revenue and expenses attributable to the programs, you are required to describe your activities. The IRS requests that you describe program service accomplishments through specific measurements such as clients served, days of care provided, number of sessions or events held, and/or publications issued; describe the activity’s objective, both for this time period and the longer-term goal, if the output is intangible, such as in a research activity; and give reasonable estimates for any statistical information if exact figures are not readily available. Indicate that this information is estimated. As long as you satisfy these requirements, you are free to word your descriptions to describe your organization in its best light or to satisfy another audience.
Generational Issues
An organization should consider its target audiences in addition to the IRS. Have you considered whether you are you targeting Baby Boomers, Gen-Xers or Millennials? There has been a lot of discussion in recent years regarding the different behaviors and preferences of individuals based upon their age and experience. Focusing on these characteristics in your communication style can have an impact on attracting donors and program participants. In designing your communication, be sure to ask yourself the following questions:
- Do the people you want to attract respond better to certain types of communications?
- Does your mission seem meaningful and engaging? Does it address issues that a specific generation is attracted to or has concerns about?
- Do your descriptions help a donor feel like they can be an active participant in your mission?
- Do you provide validation to donors in your description of accomplishments that helps them see the outcomes of their support?
- Will referencing support of a “member” or “partner” help a donor feel they can become involved?
- Are you using the right language to attract donors that may have an interest in giving through a will or living trust?
- Would it be effective to describe and provide links to more far-reaching digital tools, such as social media campaigns, to attract a large number of small donations?
- Do you effectively utilize a blog, Twitter or other social networking sites?
- Do you know how to speak to and attract a long-term donor?
- Do you know how to send a message that will get noticed, catch on and spread the word?
Giving your readers information about what you do with their generational needs and concerns in mind can be helpful in connecting with them as you describe your mission and activities in your Form 990.
Measuring Impact
Many donors and charity evaluators have been very focused on outcomes in recent years. Since the information from Form 990 is more readily available and increasingly in a readable format, many industry partners are jumping on the bandwagon, either for philanthropic or commercial purposes. Data about organizations is now gathered, analyzed and compared to describe and compare your nonprofit to other organizations. At the same time, others are compiling and analyzing data and demanding more concrete information about performance. It is often now expected that an organization devote resources to measuring and communicating how they have used funding to effectively produce outcomes, as well as justify that the outcomes are appropriate. It can be a balancing act between serving your mission and satisfying the new performance-oriented donor or member. An organization that does not focus on and effectively communicate its results may be at a disadvantage when seeking grants, contributions, dues and other resources.
Share your Story
Storytelling can be an effective communication tool. Stories influence a reader and help people remember facts and circumstances. As such, they provide nonprofits an opportunity to better connect with donors, which can prompt them to be more generous. Stories can also instill a sense of urgency or need, as they have the power to paint a picture. Be sure to state what you stand for and connect them with an image or activity readers will remember. To accomplish this, you may want to include other members’ perspectives of your organization in the Form 990 preparation process. Many organizations now have a final review by their development department or the social media team to help provide this collaborative overview. Above all, whatever you use to describe your organization for Form 990 purposes, you should always consider your larger audience. Although you may want to be brief and quickly scratch off the Form 990 preparation from your to-do list, targeting your readers and telling your story can provide a significant advantage to nonprofits. But remember, you’re also talking to the IRS.
This article originally appeared in BDO USA, LLP’s “Nonprofit Standard” newsletter (Summer 2015). Copyright © 2015 BDO USA, LLP. All rights reserved. www.bdo.com
