What Can You Learn About a Nonprofit From Its Form 990?

If you’ve ever wondered how a nonprofit spends its money, who runs it, or whether it’s trustworthy, there’s a simple way to find out, take a look at its Form 990.

Every nonprofit (with limited exceptions) in the United States is required to file this form with the IRS every year.  It’s like a financial and organizational report card, and the best part is, it’s public.  Anyone can view it online for free.

But if you’ve never opened one before, the Form 990 can seem confusing.  What exactly does it show?  What can you learn from it?  And why does it matter?

What is the nonprofit’s mission and what does it really do?

At the beginning of the 990, you’ll find the nonprofit’s mission statement, a clear sentence or two explaining why the organization exists.  For example, it might say, “To provide after-school programs for underserved youth” or “To protect local wildlife and habitats.”

Beyond that, the form asks nonprofits to describe their major programs and activities.  This tells you what the nonprofit actually spends its time and resources doing.  Are they running educational workshops?  Providing meals?  Offering counseling?

This section helps you see if the nonprofit’s actions match its stated mission.  For example, if an organization says it supports education but most of its programs are actually about fundraising events, that’s a red flag.

Where does the nonprofit’s money come from?

The Form 990 shows exactly how a nonprofit raises money.  It breaks down revenue into categories such as:

• Donations and grants: Money given by individuals, companies, or foundations.
• Program service revenue: Money earned from the nonprofit’s activities, like ticket sales, membership fees, or services provided.
• Government funding: Grants or contracts from city, state, or federal government.
• Investment income: Earnings from investments or savings.
• Unrelated business income: Money from activities not related to the nonprofit’s mission (which may be taxed).

Knowing where the money comes from helps you understand how the nonprofit is funded and whether it relies heavily on one source.  For example, if 90% of their funding comes from a single government grant, losing that grant could be risky.

How does the nonprofit spend its money?

One of the most important parts of the 990 is how expenses are divided.  It shows how much the nonprofit spends on:

• Programs: The work that directly supports the mission, like running a shelter or educational classes.
• Management and general expenses: Overhead costs such as rent, utilities, and salaries for administrative staff.
• Fundraising: Costs related to raising money, like events, mailings, and marketing.

Many donors want to see that most of the money goes directly to programs, but it’s also important that the nonprofit invests enough in good management and fundraising to stay effective.

Who is in charge?

The form lists the names of the nonprofit’s board members, officers, and key employees, along with their salaries if they earn more than a certain amount.

This section gives you a sense of who is leading the organization, how big the leadership team is, and whether they’re compensated fairly.  It also lets you check for potential conflicts of interest (like family members on the board).

How is the nonprofit governed and run?

The 990 asks questions about the nonprofit’s policies and procedures, such as:

• Does the nonprofit have a conflict-of-interest policy to prevent board members or staff from benefiting personally?
• How often does the board meet and review finances?
• Are there whistleblower protections?
• Does the board approve the budget?

Good answers here (answering yes to having a policy in place) show the nonprofit follows strong, ethical management practices, important for keeping the organization accountable and trustworthy.

Is the nonprofit financially healthy?

By looking at the 990’s financial statements, you can get clues about the nonprofit’s financial health.  For example:

• Does it have enough cash or assets to pay its bills?
• Does it have any debt or liabilities?
• Is its revenue growing or shrinking year after year?
• Are expenses increasing faster than income?

Stable or growing finances are a good sign, while large losses or inconsistent reporting might mean trouble.

Other useful details you can find

The 990 also includes information like:

• Whether the nonprofit spends money on lobbying or political activities (which are limited for nonprofits).
• How much it pays for professional fundraising services (which affects how efficiently it raises money).
• Any relationships with other organizations or people that might present conflicts.
• Details about grants made to others if it acts as a grant maker.

Why does all this matter?

The Form 990 is often the first place people go to learn about a nonprofit whether they’re potential donors, volunteers, journalists, or community partners.  It’s a snapshot of how the nonprofit operates financially and organizationally.

By reading the 990, you can feel more confident that the nonprofit you’re supporting is well-managed, transparent, and focused on its mission.

How can you access a nonprofit’s Form 990?

You can find Form 990s online at sites like:

• The IRS website – apps.irs.gov/app/eos/
• GuideStar (Candid) – guidestar.org/search
• ProPublica Nonprofit Explorer – projects.propublica.org/nonprofits/

These sites let you search by organization name and download recent filings.

The Form 990 is a powerful tool for understanding nonprofits, from their mission and leadership to their financial health and governance.

You don’t need to be an accountant to get useful information from it.  Just knowing what to look for helps you support nonprofits wisely and hold them accountable.