Financial documentation is an important part of any nonprofit’s existence. Your nonprofit is of course incorporated in it’s home state, has an Employee Identification Number (EIN) and your Letter of Determination from the IRS, plus tax filings for each year of existence. Making sure your tax and other paperwork is filed on time and correctly is essential to staying in good graces with the IRS but also for attracting and retaining donors.
Financial material should be conveyed clearly on your website, in brochures and in a grant package that is sent out to potential donors. Materials should clearly communicate the comprehensive information relevant to an informed funder or stakeholder.
Donors may want to know:
- where does your money come from? Nonprofits can generate revenue from a variety of sources
- What percent of monies collected goes toward covering administrative expenses and other overhead
- What other major donors are giving to your organization? a bust donor may not have the time to thoroughly read through your information
Financial information any nonprofit should have easily available:
- Sources of donations broken down by type: grants from foundations, donations from individuals, fees, income from an endowment, interest etc…
- IRS Letter of Determination
- Last 2 or 3 IRS Form 990
- A chart of annual revenue and expenses
- Annual Revenue and Expense data reported
- Links to your reports on GuideStar, Charity Navigator and the Foundation Center
Other documentation you should have:
- Mission Statement
- Board of Directors’ Bios
Donors want to know if you are effectively reaching your intended target. All of this data demonstrates a high degree of worthiness of funders’ support. In a busy world, a donor could be dicing between you and another organization. If they ahave to ask a lot of questions and wait for answers, it may be easier to write a check to someone else!