Reading and sifting through the information in 990s is a big part of grant writing (or at least, it should be). But most of us aren’t born with the innate ability, let alone the willpower, to read and interpret long tax forms and locate the information that might be useful for grant seeking.
Never fear, though. That’s what today’s blog post is all about: showing you how to read a 990 like a pro, quickly locating the information that will give you the best insight into whether or not a grantmaker is a good match for possibly funding your projects, program, or mission.
What is a 990?
First up, let’s look at what a 990 actually is, for anyone newer to this conversation or to the grant-seeking process. A 990 is the tax form which nonprofits are required to file annually. This means that your nonprofit organization files them, but it also means that grantmakers file them each year, too. (You can also read this Wikipedia article for some more in-depth info on Form 990s.)
And thankfully, 990s are publicly available. Anyone can view them because it’s important that any organization accepting and utilizing donations, sponsorships, and grants (or giving them out) be transparent and open about how these funds are acquired and what they are used to accomplish. This is a good thing for grant writers because it gives us an important peek inside how funders distribute grant awards, often telling us things that their websites and grant guidelines don’t.
Next up, where in the world does one find 990s?
Sometimes, they’ll be available right on that org’s or grantmaker’s website. But you can’t always count on that and besides, some small foundations don’t even have websites. If you’re lucky or well-funded enough to have a subscription to Foundation Directory Online (FDO), you can access them there. Many local libraries also maintain subscriptions to FDO and will often allow community nonprofits to use their subscription at the library for free.
But by far, the best place to find them if you don’t have access to FDO is GuideStar. GuideStar is a giant database containing profiles on over 2.5 million nonprofit organizations and funders worldwide. You can sign up for an account for free and search their database for info on any organization you might want to know more about. Profiles typically include mailing addresses, phone numbers, employee identification numbers (EINs), and the last few years’ worth of 990 filings, which you can view as a PDF file.
In all seriousness, if you haven’t already, go sign up for a free GuideStar account today.
Now that you know what a 990 is and where to find it, let’s move on. 990s are most useful when you’ve already identified a few grantmakers who look like viable prospects to approach for a grant. Now you need to look a little closer to see if they are really as great a fit as they appear.
Here are the steps you can use to read a 990 like a pro and evaluate whether or not a grantmaker is a strong match:
1st Stop: The section titled “Grants and Contributions Paid During the Year or Approved for Future Payment.
This section is often quite far down into the 990 and if you’re looking at a funder who makes lots of grants each year, they may even just have a line in this section referring you to an attachment with their listing of grant awards (which should be found at the end of the form).
Although there’s important info in the 990 that precedes this section, I recommend starting here anyway. My reason is simple: this section will give you the strongest evidence that the grantmaker is or isn’t a good prospect, so if things don’t line up here then you may as well not spend time sifting through the other sections.
Here’s what you should look for and what you can learn in this section:
- What kinds of organizations they’ve funded in the past…
- Are there organizations like yours?
- If they list the programs they’ve funded, is there anything similar to what you would like to propose?
- Do they ever fund orgs in your city/county/state? If you can find no evidence that they have, then this might be a longshot.
- What their average award amount has been for organizations or programs similar to yours…
- This will allow you to figure out what a reasonable “ask” might be if you decide to pursue writing a grant.
- If their application or proposal process will require a significant time commitment and effort from your staff, this will also allow you to evaluate whether or not it’s worth your time. (ex: if it takes you 20 hours to write the grant but you see no evidence that you would ever get more than $1,000 from them, then maybe your time is best spent elsewhere).
- Whether or not they fund the same organizations year after year, with little or no room for any newcomers…
- I always recommend pulling up at least 2-3 years of 990s and compare this section from each of them. If every single year the list of grantees is the same, you should probably move on. They’ve already chosen who they want to fund and it will be difficult to break into that group without a strong, personal connection.
2nd stop: The section titled “Analysis of Change in Net Assets or Fund Balances”
This is a pretty short section, but if you look at line 6, you should see their total net assets/balance if funds at the end of the year. This figure will tell you the following:
- The funder’s capacity to make grants (a bigger # means they can make more grants).
- How competitive those grants might be (for example, smaller funders with less dollars to give may actually be more competitive).
- Whether or not that funder has grown in past years or whether they may be experiencing any financial difficulties (in which case getting a grant might be harder).
3rd Stop: The section titled “Information about Officers, Directors, Trustees, Foundation Managers, Highly Paid Employees, and Contractors.
This section can help you greatly with cultivation or even with being able to apply at all in some cases. Here’s what to look for:
- Familiar names! A familiar name can do some important things for you…
- You may have identified a grantmaker whose funding interests and guidelines are a slam dunk for a program you need to fund, but unfortunately, it looks like they don’t take unsolicited proposals. But If you or someone from your organization knows someone affiliated with the grantmaker, you may be able to get an invite to apply.
- If you don’t see any familiar names, send the list to your board. They may know someone who can help you get a foot in the door.
- If you don’t see any familiar names…
- Then it’s time to start from ground zero with a funder cultivation plan. Start with a phone call or email to one of their grants officers or other likely contact and just introduce yourself.
- Here are two blog posts where you can get more insight into forming relationships with funders:
Cultivating Relationships With Funders
4th stop: Back to the top of the 990, page 1
Here you should see a section that tells you whether or not the organization works on a calendar year or if not, what dates their fiscal year falls within. If this funder has hard grant deadlines, then this information may not be that useful. But many funders (small foundations especially) have no real deadlines. They accept proposals on a revolving basis instead. That sounds great, right? You can send in your proposal anytime, meaning that you can do it on your schedule!
You absolutely can do that, but it’s not always the most savvy approach. Often organizations that don’t have deadlines and consider proposals year-round will, in reality, have already allocated all their grant funds before the end of their fiscal year, making an award to your nonprofit unlikely. In these cases, knowing the dates of their fiscal year can help you determine when the best time to apply might be (typically at the beginning or possibly the middle of their fiscal year).
Note: fiscal year dates often don’t line up with the calendar year so in many cases, sending in a proposal at the end of the calendar year (October through December) is just fine. You can read more about year-end grant proposals here, if you’re interested.
Although there are plenty of other nitty-gritty details on a 990 you could delve into, 99% of the time examining these 4 areas will help you determine whether a funder is a good prospect to approach for grant funding. Now get out there and start putting together your grants strategy!