How Well Do You Know the Nonprofit That You Support?
Access to information is the key to effective philanthropy. As an expert in philanthropy, CFNLA seeks to provide all the tools necessary for donors to make informed decisions resulting in effective philanthropy. As a donor, it is important to understand the needs of the community you wish to support. For this reason since 2008 CFNLA has been tracking and publishing data annually in Community Counts. This data is essential to help North Louisiana set priorities, track progress, formulate policy and allocate limited resources.
After determining how your philanthropic passion overlaps with the needs of the community, you then need to find the nonprofit most effectively meeting those needs. One of the best sources of information about nonprofits are Form 990s, the annual tax return the IRS requires nonprofits to file. Until recently, Form 990’s have been mostly inaccessible to the general public without costly paid subscriptions. Now, with a free online tool launched by Candid (formerly Foundation Center and Guidestar) anyone can search for a nonprofit’s 990. Using the online tool donors are able to review the 990’s of their favorite nonprofits. You do not need to be a tax expert to understand a 990.
When looking at a 990, here are some things to consider:
- Is the annual revenue greater than the expenses? It should be. (See Revenue less expenses, line 18) In other words, is the nonprofit operating at a loss? Just like a for profit business, a nonprofit should generally not operate at a loss.
- What proportion of the expenses are dedicated to salaries and compensation versus programming?
- Does the nonprofit have substantial liabilities that would threaten its long-term viability?
- Who are the Board members governing the nonprofit?
As a donor, you have every right to get to know the nonprofit you support and understand exactly what your donations are being used for. Searching for a nonprofit’s Form 990 is as easy as using the tool below.