Using Form 990 as a Marketing ToolBy Robert Lyons | February 2, 2018
When you think of marketing, do you think of your IRS Form 990? Traditionally, the answer to this question would be no.
A Form 990 is an informational return that is filed with the IRS and numerous State agencies. It captures information such as revenues, expenses and demographics – outlining the organization’s various programs, quantifying its public support and highlighting salary information. In short, it is a document driven by accountability, visibility and transparency that is often thought of only as a tax compliance document.
Form 990 provides key details to external stakeholders such as the IRS, the States, Guidestar, Charity Navigator and potential donors. However, the document also has one additional, very valuable purpose: it is a marketing tool. Unlike a tax return, Form 990 is a public document open for inspection. Currently, the only part not available to the public is Schedule B, which shows contributor information. The rest stands out in all of its glory – which can be good or bad, depending on the organization.
As a public document, Form 990 is often the first introduction that philanthropists and donors have to your organization. Consider it the first stop. This is where they would learn what type of programs your organization conducts, your expenditures and control, governance and any other pertinent information about your organization. There are several sections on Form 990 that encourage transparency. In Part III of the Form, the organization has the opportunity to showcase the programs it is conducting. It is imperative that you shine in this section and take advantage of the opportunity to cast a light on your organization’s activities using your own words. It’s your story, tell it. Short and simple, Showcase and Highlight.
Much of the Form 990 has limitations – such as not showing in-kind services or use of facilities. These are reconciled in Schedule D, Parts XI and XII. However, in Part III, you are not limited solely to factual information. While showcasing your organization’s programs, highlight your volunteers and services not reported otherwise. Build the reader’s enthusiasm not only to help financially, but to become part of the organization’s mission.
Below are ten tips your organization can utilize to more effectively leverage Form 990 as a marketing tool:
1. Utilize space on Form 990 and Schedule O, as needed. There is no limit to the number of pages you can use in Schedule O. Begin your descriptions in Part III and let them roll over to Schedule O. If you capture the reader’s interest early on they will go to the back to finish.
2. Be complete and accurate. Provide statistics: people served, units provided, levels of education, etc. The more detail the organization provides, the more credibility will be found in the information.
3. Provide detail as necessary. If you serve 1,500 people, state that. Quantify and qualify: do not use broad terms.
4. Clearly state your differentiators. What separates you from others? What really makes you unique and separates you from the competition? Donors generally have limited budgets so tell them why they should use their resources to support your organization.
5. Know your audience. Develop an understanding of who is reviewing your return. The audience may include potential donors, watch dogs, prospective board members, and state/federal regulators. Many organizations are supported by program service revenue rather than contributions. What would funding agencies want to know about your organization?
6. Sell yourself! Ensure alignment between your programs, your mission and your marketing materials. Use similar language so it sounds familiar. On the face of Form 990, there is space for the organization’s website. Ensure that the information on the website agrees with your Form 990 disclosures.
7. Seek help from your marketing department. Have your internal marketing professionals reviewed Part lll of the Form 990? These in-house resources can add tremendous value and assist with aligning Form 990 with the organization’s mission and promotional message.
8. Focus on results. In addition to reporting on your programs, provide results and metrics. Quantitative data validates and reinforces the importance of your organization’s mission.
9. Disclose, disclose, disclose. Your 990 should highlight several areas such as compensation, governance, programs, policies and any related party transactions. This would be of interest to potential donors as well as regulators.
10. Most importantly, since activities change from year to year do not cut and paste from previous year to ensure you capture the most accurate information.
The IRS’s Form 990 is full of information – some obvious and some hidden. One area that is often overlooked is found in Part IX – Statement of Functional Expenses. The Statement breaks down an organization’s expenses between program, general and fundraising. More important than the figures themselves are the ratios of these categories to the total. What is the ratio between program and the total? Fundraising and total expenses? Donors want to know that their dollars are used to efficiently carry out the organization’s mission. In fact, some funding agencies, as a matter of policy, will not fund organizations that fall below certain ratios.
Form 990 should serve as a transparent representation of the organization. While the market is competitive for donations, be smart and utilize the tools that are available to you while promoting your organization. Don’t miss this golden opportunity!
About Robert Lyons
Robert (Rob) Lyons, CPA, MST, is a Tax Director, Exempt Organizations in the Nonprofit, Government & Healthcare Group at Marks Paneth LLP. Mr. Lyons brings to this role the skills he has developed during more than 30 years of providing tax and consulting services to his clients in the nonprofit, higher education, and public sector industries. His experience includes handling substantial exempt organization tax issues. Mr. Lyons has testified in front of the House and Ways Committee in... READ MORE +