Researching Not for Profit Financials
It is hard to believe but we are heading into the last quarter of the year. That brings with it a focus on charitable giving.
For small businesses or individuals who may wish to know more about the financial wherewithal of any not for profit organization, there is a public website to obtain that information. Most Not for Profits are required to file Form 990 and the best site that we have always used is one called GuideStar. It is free, and you can usually locate your organization by its name and state.
So, how useful can the information on this site be to you? Very, in my experience. It will tell you if the organization has been operating at a stable financial position. It will tell you the annual income and expenses for the organization. It will provide you with detail on asset and investment levels. And you will be able to identify all the Trustees or Directors on its Board.
A good team building exercise is to identify a charitable organization where your team can volunteer together. Examples include Food Banks, Homeless Shelters, and Low Income Housing Organizations, to name a few. It is a good idea to research the financial stability of any organization like these to ensure you are partnering up with a solid firm that has a track record of managing its mission well. As an owner or a manager of a small business, encourage your staff to support these organizations after you have researched them and determine their fit and their financial wherewithal well into the future.
Who has to file the 990 form you may ask? A Google Search yields this answer: ‘An organization that normally has $50,000 or more in gross receipts and that is required to file an exempt organization information return must file either Form 990, Return of Organization Exempt from Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt from Income Tax.’ Most organizations you will be looking to make donations to or partner with will likely fall into this definition. Therefore, you should be able to view their most recent 990 forms at GuideStar.org.
Do note that this applies to all not for profits, not just those with the Tax Exempt 501(c)(3) designation. If you are considering joining a club of any kind, nearly all are organized as not for profit organizations.
I recently researched my old social club and the three (3) other ones I was considering joining. Reviewing all of their 990 Forms online provided me with insight into their membership level, their financial condition, their cash balances, and their investment assets. I was also able to identify which had 501(c)(3) foundations associated with them which normally act as a fundraising arm for capital campaigns around their real estate holdings. This research was most informative for me and allowed me to make the decision best for me.
As we enter the end of this year, do your research if you are considering tax exempt donations, partnering with a charitable organization for company volunteering efforts, or just seeking informative insight into a club or organization that you or a family member are a part of or considering for the future. Stay informed like Kharma, our dog of the week!
Be well.
