Finding the “Hot Spots” on the Form 990 by Tish Mogan, Pennsylvania Association of Nonprofit Organizations

“We love our Form 990!” Would any nonprofit organization ever make that statement? Loving it might be a lot to ask. We at least need to get to the point where we can say, “Our Form 990 represents our nonprofit very well and we are proud of its contents.”


Why such a “to do” about Form 990s? Taking a step back to the “pre-GuideStar era (founded in 1994),” most folks didn’t even know what a Form 990 was. As GuideStar grew to be more of household name among nonprofit organizations, the treasure trove of data made available to the public spurned a whole new industry, “charity watchdogs.” This phenomenon brought a much greater focus on the Form 990. Unfortunately, the nonprofit sector was not catching up as fast in assuring the accuracy of the information in the Form 990. And what we have seen, we still haven’t caught up.


In PA, the Pennsylvania Association of Nonprofit Organizations (PANO) works with thousands of nonprofit administrators and board members to promote legal and best practices for nonprofits. Our Form 990 trainings point out the “public relations sensitive” areas and assist organizations in analyzing and reviewing the contents. We stress that the auditor is not in a position to know everything that the organization thinks is important to report. It is the organization’s responsibility to tell the auditors what needs to be reported.


Providing trainings and working one-on-one with organizations is yielding results. We see great improvements in the Form 990s for organizations going through their Standards for Excellence®recertification process. Yet for the thousands of nonprofits the reporting is not getting any better.


Misreporting the fundraising expenses is the most serious error. In addition to the error statistics cited in “The Overhead Myth,” Scripps Howard News Service 2012 study showed that 41% of US charities raising over $1 million show “$0” fundraising expenses. PANO frequently sees these errors even in organizations with excellent staff and board leadership. What are we missing here? Education!


To address this, PANO has partnered with at least 10 CPA firms throughout PA to provide training with nonprofits on what constitutes an administrative, program and fundraising cost.


We see areas in which nonprofits either miss an opportunity to tell a good story or they have information that tells a poor story. E.g., Part III, line 4 clearly states, “Describe the program service accomplishments.  In many cases we see a program description and, at times even less, with something like “food pantry” as the only words listed. We encourage organizations to use this to tell the public their outputs, outcomes, impact, etc.


Part VI contains the list of board members and the hours per week that they work. Many times, we see “0” straight down the page. Do we really want to tell the public that our board does absolutely nothing? Almost as bad is when we see 1’s or 2’s all the way down the page. As a savvy donor, I think it is unlikely that every board member gives the exact same amount of time every week. This leads me, the savvy donor to ask “Did the administrators and board members do their job in reviewing the form?”


Then there are those special events in Part VIII where it seems that no portion of the revenues collected would be considered charitable contributions. When the ticket price for an event is $100, one would think that some portion of that was a charitable contribution (amount above the fair market value of goods received). Granted it isn’t the everyday donor that would notice that nothing was reported on line 1-c (fundraising events). Still the charity should be the one who cares about reporting this correctly.


To address these and the other “hot spots,” PANO decided to create a user-friendly tool that assists nonprofits in looking at the “public relations sensitive” lines of their Form 990. Thanks to the PANO Form 990 task force consisting of PANO staff, six CPA firms and two attorneys, we now have a checklist that will promote Form 990s that tell a better and truer story. Download the Form 990 Public Relations Checklist. We welcome all to make use of this and be able to say, “Our Form 990 represents our nonprofit very well and we are proud of its contents.”


About Amy Coates Madsen

Amy Coates Madsen serves as the Program Director of the Standards for Excellence Institute.
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4 Responses to Finding the “Hot Spots” on the Form 990 by Tish Mogan, Pennsylvania Association of Nonprofit Organizations

  1. The world of non-profits is very interesting

  2. Nice article, Form 990 was intruiging

  3. ENSEMA says:

    I’ve worked in non-profits before and was glad to sumble across this article.

  4. Interesting read, always fascinating to learn more about non-profits. Thanks!

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