Transcript Episode 142

Transcript Episode 142 – Leveraging Your 990 as a Powerful Marketing Tool on The Prosperous Nonprofit

Stephanie Skryzowski: [00:00:00] Welcome to the Prosperous Nonprofit, the podcast for leaders who are building financially sustainable and impactful nonprofits and changing the world. I’m Stephanie Skrzewski, a chief financial officer and founder and CEO of 100 Degrees Consulting. My personal mission is to empower leaders to better understand their numbers, to grow their impact and their income.

On this show, we talk to people who are leading the nonprofit sector in new, innovative, disruptive, and entrepreneurial ways, creating organizations that fuel their lives, their hearts.

Hey there, welcome back to the Prosperous Nonprofit. Today you have just me, your host, Stephanie Skrzewski, and we are talking about the 990. Yes, you got it, my friends, the nonprofit tax [00:01:00] return. I know, so exciting, but listen, what we are going to talk about today is really unlocking the power of your 990 and how you can leverage your tax return.

Literally leverage the 990 for more effective and more interesting marketing. So stick with me because this is going to be a really good one, right? If you have ever thought of the 990 as like, uh, just the annoying, really, really long form that we have to fill out at year end. I mean, you’re not wrong, but there are some specific pieces inside the 990 that you can really focus on to leverage it as a marketing tool.

Um, so we’re going to talk, um, about a few different things today. We’re going to talk about the ins and outs of the return. So if you never have personally filed the 990 before, I want to tell you a little bit about that. We’re going to talk about how to identify marketing opportunities within the 990 and ways to leverage the 990 for marketing and a couple of examples of nonprofits that are doing this [00:02:00] well.

Now, I know you’re not. Looking at slides or watching me talk through this and you don’t have a 990, you probably don’t have a 990 in front of you if you’re driving, if you are taking a walk, but when you get back to your desk, maybe take a look at your organization’s 990 and listen to this episode again, or maybe go onto guide star and grab the 990 of a nonprofit organization that you know.

Now, even if you’re not a nonprofit, even if you’re like, okay, you’re talking tax returns for the nonprofit, peace out, listen up. There may be some stuff for you in here as well, ways that you can apply this to your work in your organization. Okay, so ins and outs of the 990. What is a 990? So it’s a tax return, 501c3, exempt non profit organizations and private foundations need to fill out the 990 every single year, and especially if your gross receipts, so basically your incoming money is more than 50, 000 a year.[00:03:00] 

Now there are a bunch of different. of the 990. I’ll say there’s like the, the sort of main one that the majority of organizations file. If your receipts are more than 200, 000 and your assets are more than 500, 000, you’re filling out the main form, the big one. Now, if your receipts are less than 200, 000, And your assets are less than 500, 000.

You’re filling out the nine 90 easy. And just like the, like your 10 40 personal return and there’s a 10 40 easy same kind of concept, right? There’s not as many schedules. There’s not as much detail in there. You still want to pay attention and everything that we’re going to talk about today applies to you as well, but you just have a shorter form to fill out.

If you are a new organization. You have receipts less than 50, 000. There’s the 990N, um, which is like a super short form. And then the 990PF is for private foundations. So just make sure, um, especially if you are in the first few years of your [00:04:00] organization, if you’re sort of in a startup phase, um, really thinking about, okay, where are receipts and where are assets to make sure that, Hey, if you’re eligible to fill out the easy.

Don’t fill out the giant 990 form, right? Make sure you’re filling out the right thing. So when is this thing due? Because it’s a beast and you want to plan ahead. Trust me. You want to plan ahead. Now it is due the 15th day following the 5th month. After your fiscal year end, right? Could it be any more confusing?

Okay. So if your fiscal year ends December 31st, your 990 is due May 15th. Okay. If your fiscal year end is June 30th, your 990 is due, wait, I don’t have this in front of me. I’m doing the math, is due November 15th. Okay. So there are extensions available for six months only. So you can file an extension.

It’s a one page form. You don’t, I mean, the IRS technically [00:05:00] approves it, but you basically just fill in the form, send it in and you get a six month extension. And so for my December 31st year end people, that gets you to November 15th. So the main dates that most of our clients are working with are either May 15th or November 15th.

So just remember that there are extensions available and it is so much better if you think you’re going to be late. Don’t send it in late. Just get the extension and then you know that you have that little buffer of time. So where does 990s go after we file them? Well, we file them directly with the IRS.

That is like the governing body, right? And then they are sent to GuideStar by the IRS. So GuideStar, as we know, is a huge database of all nonprofits in the United States. And other 990s are there too. And then of course you can send. 990 anywhere you choose. You can put it on your website. You can send it out in an email blast to everyone on your email list, your donors.

You can do whatever you want with it. Obviously, your board definitely gets [00:06:00] a copy, but you can do what you want with it after that. Now, the 990 is. It’s definitely more than just a tax return. And here’s why. Number one, it’s a public document. So unlike your personal tax return, the 990 is a public document and it showcases your mission accomplishments, your financial health, and frankly, it’s one of the first documents that potential donors are going to review before they choose to give.

External groups like Charity Navigator often use the 990 and the data inside of it to rate you as an organization. And so to give you a rating and think about Charity Navigator, there’s different levels of ratings on there. Think about GuideStar, there’s bronze, silver, gold, platinum ratings, right? And so we want to make sure that we’re putting care and attention into it.

Not just to make sure it’s accurate, but more than that, we really want to make a good first impression on those people that are reviewing our [00:07:00] 990 with the intention of possibly giving to us. The 990 is a really great way to promote accountability and transparency, right? We want to be able to showcase this and be proud that it’s on Charity Navigator and be proud that it’s on GuideStar.

And just be transparent as an organization. Um, GuideStar published a study a few years ago that said organizations that were more transparent received 53 percent more in contributions the following year. Like that’s huge, right? You may have actually even heard me use this statistic before because it’s such a good one.

It’s so important. If you are more transparent, you will raise more money, period. Right? I mean, that’s incredible. So really taking care in your 990 because it’s going to be out there. So thinking about marketing opportunities in the 990, now listen, if you are at a place right now where you can grab your 990 or you can go to GuideStar and grab the 990 of literally any organization that you want, I will pause for two [00:08:00] seconds and wait for you to do that, or just hit pause on your podcast player.

Okay. So if you have a 990 in front of you, I want you to go to part one, question one, the mission statement, right? This is a great opportunity to not just put like our mission is to end poverty in the U S right. Put some detail here. Yes, there’s only four lines on this page, but you can. continue on in schedule O so you can write like a beginner, like a sort of a basic first sentence and then see schedule O.

And then you have so much more room to write like what is our full mission statement? What are we actually trying to do? Right. Um, That detail right there, first of all, it’s like right in the center of the very first page of the 990 that really sets the stage for, Hey, what’s this organization all about?

The second section I want you to pay attention to is also on that first page and it’s in lines eight through 22. So it’s kind of in the second third of the page and it’s your [00:09:00] financials at a glance. And so we’re looking at your revenue, your expenses, and your net assets, and we’re looking at last year compared to this year.

So this is, I mean, for me, if I’m ever trying to get an idea of, you know, okay, what, give me kind of the basics about this organization, I’m going right there. This is, again, still on the first page. So this really gives us a good idea. of the snapshot of like the financial position of the organization. Oh, wow.

They did a hundred million dollars in revenue last year. Oh, interesting. It’s mostly made up of contributions and grants. Um, you can really get a good snapshot. So we want to make sure these numbers are accurate. I can’t tell you how many times I’ve seen these numbers not be accurate. These numbers don’t tie to the audit or they don’t tie to what’s in QuickBooks because people were.

You know, preparing the nine nineties sort of in a vacuum, right? So make sure that these numbers are right and that they tie to everything else that you’re putting out there. I actually had a funder at sometime recently look at the [00:10:00] audit and it didn’t tie to the nine 90 and we had to kind of explain why and tie the two together.

So the next place I want you to look is on part three, question four, and then this is your program service accomplishments. Now this usually lands, I think, on the second page of the 990. Now you have an opportunity to write about five different program areas. And so the mistake that I see a lot of organizations making is just putting like one or two sentences like our girls education program serves girls ages six through 14 and teaches them, you know, English and math, right?

Whatever. Well, that really doesn’t tell me a whole lot. That’s not really compelling. That’s not exciting. I don’t get particularly excited about donating to that. But now a really great way to do this is to put really thorough descriptions that tell a story and include metrics, right? So your savvy donors are going to look here and try and calculate, okay, what’s my ROI?

Because if you’ve got something in here that [00:11:00] shows, okay, we spent 15 million in this area last year and we were able to do X, Y, and Z. We were able to change this many lives. We were able to send this many girls to school. We were able to feed this many people in this geographic area, right? Include those metrics, include those KPIs in there because your donors are going to look at that.

Your savvy donors are going to say, Oh, wow, look at what they did last year with, you know, a million dollars in this program. Imagine what my. You know, 5, 000 could do to help them even further. Um, so we really want to include thorough descriptions and programmatic metrics in here and really help this tell a story.

This part I would say is like perhaps the most important part of the 990 in my opinion. So again, this is part three, question four, it’s your program service accomplishments. And it lands, I think on the second page of the nine 90 and there’s sections to write about five of your most important, most prominent programs.

And I really encourage you to use thorough descriptions, use metrics, use numbers in there [00:12:00] and tell a story so that your donors or your readers or your community, whoever’s looking at this can really. See the impact that you’re having, right? So words are very, very important in this section.

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So part nine. So we’re moving along now. We’re like definitely about 10 pages into the 9 90 at this point, your statement of functional expenses. And so this really shows the breakdown of. Program admin and fundraising expenses. And it’s important to do a little bit of math that doesn’t necessarily land in the nine 90, but really understanding what percentage of your expenses go towards programs, go towards admin, go towards fundraising.

I’m sure no matter what your role is in your organization, you have definitely gotten asked the question, how much money do you spend on programs or how much money do you spend on overhead? What percentage is your overhead? What’s your overhead rate? Right? And so knowing these numbers, you can easily grab this from your nine 90 on the statement of functional expenses.

Now schedule F. So we’re kind [00:14:00] of at the back of the nine 90 now schedule F is your statement of activities outside of the U S. And so this could be really interesting to show where Your organization works, right? You could create a visual map of your program areas. I think that would be really cool so that your audience can sort of visualize the different places around the world that you work.

Now, if you work only in the U. S., you will not fill out this schedule, so this does not apply to you. Now, Schedule O, we’re all the way at the back now, and I’ve, I’ve skipped some schedules, right? I just went from Schedule F to Schedule O. There’s other ones in between, but I’m kind of picking out the most important pieces for you to focus on.

Now, Schedule O is basically a blank page. It is for supplemental information, and it gives you an opportunity to elaborate on literally anything you want. all of the preceding pages, right? So you can give context. You can tell the story. You can, um, write more about your mission statement. You can write more about your programs.

You can share more about the different practices within your organization to [00:15:00] say, uh, determine executive compensation, right? How much are you paying your executive director? How do you determine that? What does your process look like? You can elaborate more. On the process by which your board reviews and approves the audit in the 990, right?

This is your opportunity to tell your story. And so often I see like nothing here or maybe like a sentence or two that sounds like boilerplate language. And again, Um, your savvy reviewer is going to look at this. So use it as an opportunity to give context and tell the story on anything in the preceding pages.

Now, especially if there’s something funky going on, right, like maybe there’s a huge decrease in revenue or maybe some, you know, you checked no on a box that, you know, maybe should be checked. Yes. Like you don’t have anybody independently reviewing the executive compensation, right? But there’s a reason for it.

Supplemental information use schedule. Oh, as an opportunity to [00:16:00] elaborate. Now we can really use a nine 90, all of the pieces I just mentioned as a strategic marketing tool to make a really good first impression on our donors, on other stakeholders. So what I want you to do now is take a look at your current.

990. Okay. And look at the areas that we just talked about. Save this podcast episode, go back to the beginning and start over. Start with the mission statement, like I mentioned on page one. And I want you to refresh your next 990 and use fresh content, right? Stop recycling those old descriptions of your programs from five years ago that don’t have any metrics in them and really collaborate.

If you’re on the finance team, collaborate with fundraising and marketing to get the right language, the new KPIs, the new data, the new way that we’re talking about our programs. If you’re fundraising and marketing. Give that information proactively to your finance team, right? Or share this podcast episode with them.

So we want to use fresh content and we want to understand the key numbers and the key things that you should know on [00:17:00] your 990. So here are a few ways to really leverage the 990 for marketing and for awareness. The first is transparency, right? We’re using the 990 to highlight our financial information.

We are putting it all out there to build trust with donors, with our stakeholders, with the public, right? Being transparent about our numbers is so important. And like I said, More transparent organizations raise more money. Period. You build trust with donors by doing so. So that is huge. That’s one way, um, that the 990 really helps you is by helping you be more transparent.

The 990 also helps you with impact storytelling. We can craft compelling narratives from the information. in the 990 to showcase our achievements and our impact, right? There’s financial metrics that are inside the 990 that can really help sort of make your stories more robust. When you add data to your stories, it only makes them that more powerful.

Website content. So [00:18:00] please put your 990 on your website. Um, put an easily accessible version of the 990 on your website. Maybe create a dedicated page that highlights the most relevant and impactful. Aspects of the form that really pops out those sections that I mentioned to you about our program service accomplishments about our total program expenses about our operations overseas, maybe schedule.

Oh, with all that extra detail, right? Put this on your website and have really easily accessible format, social media, and email, right? You can incorporate key pieces from your nine 90 in your donor newsletters and your emails and your fundraising campaigns, or. Like one of my favorite nonprofit organizations, you can email the whole darn thing to your list.

Yes. When you file your 990, you can be like, Hey everyone on our email list, I just wanted to share with you, our 990 is filed. Here’s where you can find it on our website and on GuideStar. Feel free to take a look at our tax return, right? So we’re happy to share with you exactly [00:19:00] how we’re spending our money.

So you can email the whole thing to your list. Thinking about social media, infographics, different charts and graphs to use for engagement and shareability, right? I always want, and maybe it’s because I’m a numbers person, but I always want to know behind the scenes into other people’s organizations, other people’s businesses, right?

So sharing these key like tidbits of information on your social media, I think is really, really a great engagement tactic. Charity watchdog organizations, listen, go right now, pause this podcast, go over to GuideStar and go to charity navigator and check your profiles. Oh my goodness. I cannot tell you how many people are like, Oh yeah, I haven’t looked at our GuideStar profile in a while.

Oh my gosh. Our rating is only bronze. It used to be platinum. How did that happen? Okay. Well, it’s not updated. It probably takes like 15 minutes to update it and you can very easily get yourself to a platinum rating on [00:20:00] GuideStar on Charity Navigator by making sure that information is complete and updated, right?

Especially on GuideStar. I think there’s a little bit more to it on Charity Navigator, but GuideStar for sure. You input all the information in there, you will have a Platinum rating within like a week or two. So, get your GuideStar profile to Platinum. If you go to GuideStar. org and look, look up like update non profit profile, or even just Google update, you know, or get GuideStar profile to Platinum, something like that.

You will find information to tell you step by step how to do it. So there’s no reason that we should all not have platinum ratings on GuideStar. Super, super important, because again, if a donor is looking at, you know, three or four organizations to potentially donate to, and they’re really passionate about everybody’s missions and, you know, they love every organization equally, but one of them has a platinum rating and the others are rated at bronze, they are going to think things about that, right?

Whether it’s right or wrong, they’re going to, Oh, this one’s rated higher. Transcripts must mean maybe they’re more [00:21:00] efficient with their money. Maybe it’s just a better organization, right? They’re going to think those things because that’s what our brains do. We’re humans. Right? So get your GuideStar profile to platinum.

All right. Now I kind of threw a lot at you in this episode. Honestly, this could have been a webinar and you could have been taking notes this entire time, but you weren’t. Maybe you’re going for a run or maybe you’re walking the dog or maybe just laying in the

But what I want you to do, first of all, if you weren’t sitting in front of your computer following along, I want you to just like mark this episode as unlistened to and come back to it when you’re in front of your computer. But the action I want you to take is I want you to look at your current 990.

And highlight some areas for improvement, right? How is your mission statement? Are your financials accurate? What could you do better about showcasing KPIs in your program service accomplishments? How do your program expenses look in your statement of functional expenses? How have you [00:22:00] used schedule O to really explain and share more context and tell a story?

In your nine 90, right? Highlight areas for improvement there. Then I want you to collaborate with your finance team to refresh the next nine 90. Or if you’re on the finance team, I want you to look at your nine 90 and collaborate with your fundraising and marketing communication people. to refresh the next 990.

Um, and then finally, I want you to choose one new way or platform to leverage the 990. And what I mean by this, it’s like, Oh, you’ve never emailed your 990 to your list. How about that? Oh, you’ve never posted any, you know, any little tidbits of your 990 on social media. Okay. Let’s create an Instagram post.

Oh, maybe our 990 doesn’t live on our website and people just get it on GuideStar. Okay, let’s put it on our website, right? I want you to choose one new way or platform to leverage your 990 and then go do it. So listen, this episode is coming out right after, right after the 990 extension [00:23:00] deadline for our December 31st fiscal year end people.

But. Just because that happened, it doesn’t mean it’s too late for you. Um, I want you to start thinking about this for next year. And if you have a different fiscal year end, then I really want you to start thinking about it because your 990 deadline could be coming up in the next couple months. So this is super important.

Um, I think this really could make all the difference with your organization and the way that, you know, you’re really making a first impression on donors. So. Use your nine 90 as a marketing tool. There’s lots of opportunity within the nine 90 to do that. And you got this. Okay. So my friends, that is it for today.

Kind of short episode, but really, really jam packed. Hope you followed along. Hope you shared this. And if you have a friend who could use a little help with their nine 90, please send this along. And y’all, you do know a hundred degrees consulting, my business, we provide CFO and bookkeeping services to nonprofit organizations.

So if you’re like, [00:24:00] okay, love the podcast, but what do I actually do with this? I’m really scared by the nine 90. Okay. Give us a call. A hundred degrees, consulting. com. I’ll find all the information there to contact my team and we can certainly help you through your next step. Okay, friends, thanks as always for listening.

I am so glad to be here. It’s such an honor to have you on the other side of the microphone and I’ll see you next time. Before you go, I just want to thank you for being here. To access our show notes and bonus content, visit 100degreespodcast. com. That’s 100degreespodcast. com and I’ll see you next time.