2024 May 1st

If you are a 501c3 not-for-profit corporation seeking grant funding, DO NOT FILE form 990-N!? I don’t care what your Accountant says.? Let me explain.

501c3 not-for-profit corporations are required to file an annual return. When doing so, you will complete one of the following forms in the 990 series; Form?990,?990-EZ, 990-N, or 990-PF. Your annual return must be filed with the Internal Revenue Service by the 15th day of the 5th month after the end of your accounting period. For example, if your not-for-profit's fiscal year ends in December, your annual return is due to the IRS on May 15 of the following year. Please note! Your fiscal year end is what you reported your fiscal year end to be when you first applied for your 501c3 tax exempt status.

If you do not file the required return for three consecutive years, your tax exempt status will be automatically revoked as of the due date of the third unfiled return.

Which Form Should You File?

Which form you file is dependent upon the type of 501c3 corporation you are and how much revenue your corporation received in the previous year.? If you are a not-for-profit that had revenue less than $50,000 in the previous year, you are allowed to file the simplest form which is the 990-N Postcard.? So, this is a no-brainer.? If your not-for-profit qualifies, then you should file the 990-N right?? WRONG!

When you are a not-for-profit corporation that seeks or plan on seeking grant funding, then you should avoid filing a 990-N, even if you qualify.? The 990-N does not provide any information about your corporation and its dealings.

Funders want to see transparency.? They want to be able to search your 990 and get information about your not-for-profit; it’s spending, its revenue, its programming, etc.? Particularly if you are a 501c3 corporation that has been in existence for more than two years, funders want to see your history.? If you file a 990-N, you rob them of that opportunity.? You also potentially rob yourself of funding opportunities.

990s are public information and searchable.? If you are competing against other not-for-profit corporations for a grant, then your transparency could give you an advantage over the other applicants.

In my consulting practice, I tell my clients all the time not to file the 990-N.? However, many not-for-profit corporations leave all the 990 stuff up to their Accountants.? Unfortunately, most Accountants are concerned with meeting the IRS requirement.? They are not concerned about funding or the nuances surrounding securing grants.? You hired them to do a job, file your annual report, and that is what they are going to do.? It is up to you to be strategic about which form to use and why.

If you are a 501c3 not-for-profit corporation seeking grant funding, then the only annual return form you should be considering is the 990-EZ and the 990.? If your not-for-profit had a revenue of less than $200,000 and assets less than $500,000 in the previous year, than you should file the 990-EZ.? If your revenue and assets totaled more than that, you should file the 990.? The 990-PF is reserved for private foundations only.

Pro Tip:

When prospecting funding sources you can gain useful information by looking a Foundations’ ?990s. As a Grant Writer, I go to GuideStar and look at foundations’ 990s all the time.? The 990 tells me what not-for-profits they have funded in previous years and how much they awarded each corporation.? This allows me to get a sense of what type of not-for-profits they typically fund, regardless of what they say on their website.? It also let’s me know the average grant award.? This helps me to determine how much money to ask for in the grant application.

Hope this helps you on your grant seeking and compliance journey.

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Available Resources

Schedule a FREE 30-minute consultation with me at www.501c3myorg.com

Find out more information on compliance issues for tax exempt corporations at IRS Charities and Nonprofits Page

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