By Sandy Trowbridge, Grants Development Associate (Education)
What are Form 990s?
Tax-exempt organizations are required to file an informational tax form, known as Form 990, with the Internal Revenue Service (IRS) each year. A completed Form 990 allows the IRS to confirm that an organization continues to qualify for its tax-exempt status by detailing the organization’s governance, financial details, and activities for the year in question.
Why Do Form 990s Matter to Grantseekers?
Private foundations are tax-exempt organizations and thus are required to file Form 990s (specifically, Form 990-PF). Given that these forms are such a wealth of information, this is great news for grantseekers.
As a grantseeker, you may find yourself turning to foundation websites to verify alignment before application. But sometimes scouring a funder's website and reading their grant guidelines does not provide you with enough information to determine whether an opportunity is worth your time and effort to apply. Or, in some cases, you may find that a foundation of interest does not even have a website for you to review. This is where reviewing a foundation’s Form 990 is incredibly helpful to grantseekers looking to identify best-fit grant opportunities.
As one might expect for a tax form, Form 990s can be quite long and overwhelming to read if you do not know what to look out for. The following table details key sections of Form 990s and the insights that can be gleaned from each to aid in your grant-seeking efforts.
What Information Is Included in Form 990 and How Can it Help?
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Form 990-PF Section
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Key Insights
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Part I: Analysis of Revenue and Expenses
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Refer to line 25 to see the total amount of grants paid during the year in question. This helps to give you a sense of the foundation’s size.
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Part III: Analysis of Changes in Net Assets or Fund Balances
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Review line 6 “Total net assets or fund balances at end of the year” to get a better sense of the scale of the foundation. Are they large? If yes, then their capacity to fund grants is large. Are they small? Then they may have a more competitive application process due to limited funds. Is there a substantial change in their net assets or fund balances this year? If yes, this might show that they are undergoing financial hardship which might hinder your likelihood of grant award.
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Part VII: Information About Officers, Directors, Trustees, Foundation Managers, Highly Paid Employees, and Contractors
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Scan this list to see if you know any of these individuals. If not, share this list with your staff, board, and any other relevant parties associated with your organization to see if anyone has any existing relationships and would be open to making an introduction.
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Part: Supplementary Information
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Here the foundation will note via a check box in line 2 if they only make contributions to preselected charitable organizations and do not accept unsolicited requests for funds. If the foundation does accept unsolicited requests for funds, they will leave this box blank and further note the name and contact information of the person to whom any questions should be addressed as well as detail the application process, submission deadlines, and any restrictions or limitations on awards (such as geographical area). This section is particularly helpful when reviewing Form 990s for foundations that do not maintain a website.
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Part: Supplementary Information (continued)
Grants and Contributions Paid During the Year or Approved for Future Payment
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This section is incredibly helpful as it provides you with an overview of who the foundation has given to, why, and for how much. This section also allows you to cross-compare against prior year Form 990s to verify whether the funder seems to give to the same organizations year over year, or if they frequently award to new organizations.
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· Recipient name
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Knowing the names of past recipients allows you to analyze whether they are giving to organizations like yours. If you are a public school, for example, do you see them giving to other public schools? Or do you only see them giving to educational nonprofits? In addition, if a connection cannot be found between the grant-seeking organization and the grant-funding organization when looking at the list of Officers, Directors, etc. in section Part VII of Form 990, utilizing a relationship with a previously funded organization is possible. If you happen to have a connection with a previous awardee, they may be able to facilitate an introduction between your organization and the grant funding organization.
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· Recipient address
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Knowing where past grantees are located can give you insight into whether the funder gives to organizations nationally, or largely limits their giving to a specific region, state, county, or even city. Where do they give the most awards? Do you see any significant giving happening in your state or region? If not, then this might not be a best-fit grant.
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· Purpose of grant or contribution
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Reviewing the purpose of past grants enables you to quickly assess if the funder has funded projects like yours. For example, if you are looking for funding to purchase educational technology, look to see if they have given to similar projects in the past. If you find that they are only funding teacher professional development, then this might not be a best-fit opportunity for your specific project needs.
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· Amount
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This section details the size of the foundation’s grant awards. Are you seeing mainly $1,000 awards? If yes, consider if that is worth your time to pursue. Or does the award size align more closely with your project scope and scale? If yes, they might be worth taking a closer look at. If you decide to apply, use this information to inform the scale of your request. If you see a range of awards between $25,000 and $50,000, work to keep your request in a similar range.
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Tip: Control-F is an extremely helpful tool when reviewing Form 990s (especially for larger foundations whose Form 990s can number hundreds of pages in length). Are you interested in quickly seeing whether the foundation has given to any organizations located in New York? Or do you want to quickly verify whether they have supported schools in the past? Open the foundation’s most recent Form 990 and then simply click “ctrl-F” on your keyboard and then type in your search term (such as “New York” or “school”) to review any locations within the file where the term is referenced.
Where Can You Access Form 990s?
Form 990s are free and publicly accessible. Some foundations will link to them directly from their websites. If they do not, or if the foundation of interest does not have a website, several other access options are available. A sample of these options are highlighted below:
- IRS Tax Exempt Organization Search Tool - https://www.irs.gov/charities-non-profits/search-for-tax-exempt-organizations (free, no account required)
- Candid / GuideStar - https://www.guidestar.org/ (free, account required)
- ProPublica Nonprofit Explorer - https://projects.propublica.org/nonprofits/ (free, no account required)
Types of Form 990s
Next Steps
Once you have a short list of foundation prospects, turn to their Form 990s to confirm which are most worth your time to pursue. As detailed above, scanning foundation Form 990s will enable you to quickly assess whether the foundation has a history of 1) giving to organizations like yours, 2) giving to organizations in your geographic region, and 3) giving to projects like yours. All of this information will allow you to identify best-fit grant opportunities more effectively.