Today I’m going to talk about the exciting topic of tax forms. Recently, the Star Tribune published a piece about why it is important for nonprofit organizations to do a good job in preparing their 990 form because it provides information to funders, donors, the media, charity watchdog groups. (http://www.startribune.com/for-nonprofits-the-990-is-more-than-just-another-tax-form/339051401/) The 990 document can give either a positive or negative impression of the organization, with good or bad consequences. All this is true.
The Form 990-PF (https://www.irs.gov/pub/irs-pdf/f990pf.pdf) is a different form, filed by private foundations, usually those entities that are providing funding to nonprofit charities. This form, as the Form 990, is readily available online at www.guidestar.com. These forms can be very useful to nonprofits that are trying to identify potential funders. While the 990-PF does include quite a bit of financial information pertinent to the foundation’s tax status, it also provides other (more understandable) information about the foundation’s operations.
Once you have some idea that a foundation might be a potential funder, the Form 990-PF can help you further determine whether it’s a good fit and possible next steps.
Part VIII includes Information About Officers, Directors, Trustees, Foundation Managers, Highly Paid Employees, and Contractors. This information can be very useful in that personal knowledge of or connections with trustees or staff might be beneficial, depending on the circumstances. The number of hours devoted by trustees can indicate how active the board is in relation to staff (if there is staff). The list of highly paid contractors can also provide interesting information; big fees for law firms, organizational development consultants and communication consultants may indicate that the foundation has been in turmoil.
Part XV of the form provides information about how to apply and application guidelines. It tells you whether the foundation pre-selects its organizations to which it contributes or whether it is open to reviewing applications (which may or may not be definitive).
Part XV also lists Grants and Contributions Paid During the Year or Approved for Future Payment, which includes the name of the grantee, the purpose and the amount. According to the instructions, the purpose should provide more than minimal detail. It is here that you can see what types of nonprofits and programs the foundation supports. You can then determine whether the foundation has a history of given to organizations similar to yours and in what amounts. You can also get an idea of the foundation’s giving pattern in general; do they give a few large awards or many smaller ones? What is the range and what is the average amount of the grants?
The bottom line is that the more information you have about a potential funder, the more you can focus your limited time and resources on the most promising funders; the more you can identify different possible avenues for approaching a funder; and the more effectively and successfully you can tailor your requests.