990

Not every nonprofit needs to fill out a 990. It depends on how much money they bring in. 

Hometown News interviewed Holly Ivel, director of data service at GuideStar, about the importance of nonprofits providing data and being transparent. GuideStar is an information service specializing in nonprofits.

Ivel began with the premise that the status of nonprofits is something given to them by the public, in trust, with the understanding that they’re doing work to serve the public good. 

“Many of these organizations are funded through donations or grants,” she said. When funds are raised through donations or grants, she said it is especially incumbent upon the organizations in a proactive way to help the public know what they’re doing.

GuideStar representatives often are asked if GuideStar has a rating framework. It does not, it does not say which nonprofits are the best. GuideStar maintains profiles on 2.7 million currently and formerly IRS-recognized nonprofits. The profiles are populated with information from the IRS, directly from nonprofits, and via other partners in the nonprofit sector. In addition to profiles, nonprofits can complete Seals of Transparency.

“We are working to encourage nonprofits, to give them a framework to provide more information to the public,” Ivel said. “A lot of the information we’re asking organizations to post publicly on our site are things that they should hopefully already be reporting on via their individual websites or in their individual reports.”

Basic info

The first Seal of Transparency (bronze) and provides basic information:

  • Organization address, contact name and e-mail.
  • Mission statement.
  • Name of organization leader and board chair.
  • Program names, descriptions and population served.
  • Geographic area served by program.

Financial transparency

The Silver Seal focuses on financial transparency.

“What a lot of people don’t understand is that the majority of nonprofits are so small that their filing requirements with the IRS in the financial arena are minimal,” Ivel said.

Almost half of the nonprofits in the country are bringing in less than $50,000, she said. For them, the IRS requires a 990 N, which Ivel said is like a postcard that the nonprofit can use to confirm key contacts and contact information and that they are still below the threshold. That, she said really doesn’t help the public to know much about the organization’s finances or work.

“What we try to do is — regardless of their size — help non-profits to post their latest financial information including their financial audits. We also encourage organizations to post their 990 filings to us at the same time as they submit them to the IRS because we all know it can take a while for those filing to make it back out of the IRS. We try to encourage organizations to tell the public more about their finances and how they track and manage their funds — Have they gotten an audited financial statement for instance? That often is a good indicator of good financial management and responsibility.”

Telling others about your work

The third level, or gold seal, communicates to the public goals and strategies:

  • What is your organization aiming to accomplish?
  • What are your strategies for making this happen?
  • What are your organization’s capabilities for doing this?
  • How will your organization know if you are making progress?
  • What have you accomplished so far and what’s next?

Metrics

The highest level (platinum) requires reporting metrics that demonstrate progress and results.

How does your organization measure progress and results?

“It’s an important question and a difficult one," according to the GuideStar Common Results Catalog. "The metrics you share are your choice and they should reflect what you already collect and use."

The Common Results Catalog contains all of the metrics in the GuideStar database — by subject area — developed in consultation with teams of experts.

If a nonprofit doesn't find a metric that fits, a custom metric can be added.

Does the nonprofit fit your needs?

Once the information is available, Ivel encourages individuals: “It’s up to you to take some time to read it and try and understand it and make personal decisions about whether or not this organization is doing work that aligns with your values, with your priorities.”

The nonprofit also should be working on a scale that you want, she said. Some people prefer small, grassroots organizations, others prefer larger, national organizations.

Possible problems

“If an organization isn’t able to articulate its mission and how its program align to its mission, that’s problematic,” Ivel said. “Any organization should be measuring what it’s doing and be able to talk about that.”

A lot of the concerns around transparency have to do with financial management and also conflicts of interest. An organization that is willing to post who their boards of directors are, that they’re independent, that their finances have been audited on some level, or just to simply post their annual report, these are just signs of good faith that that nonprofit is demonstrating to community that it’s working with.

Another example, is related to organizational documents. If when asked an organization is not able to easily share a copy of its bylaws with the public, for instance, Ivel said that’s problematic.

GuideStar does not vet the information submitted to its website.

“If an animal shelter tells me they did 1,500 adoptions last year,” Ivel said, “we do not have independent auditors who are screening that information. What we count on is that the general public and that the foundations working with these organizations are looking at this data as well.

“We do occasionally get calls saying that somebody seems to be misrepresenting something and then we try to figure out what’s going on.”

GuideStar is not an independent auditor, rather it is a platform for the general public and funding providers to help them better understand nonprofits.

The profile framework is free of charge for nonprofits to use/populate. Information nonprofits provide is also freely available to anyone who registers on our site.

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