Navigating Nonprofit Reporting Requirements: What to Know

What this is: Nonprofits must follow various reporting requirements to ensure they maintain legal compliance. This includes reporting both financial and program-related information. 

What this means: Nonprofits must follow various reporting requirements to ensure they maintain legal compliance. This includes reporting both financial and program-related information. This guide explores common reporting guidelines related to finances and programming. 

Financial Reporting

Accurate financial reports benefit everyone: your nonprofit, your stakeholders, and government officials. With routine reports, your nonprofit keeps its finances organized, donors understand how their gifts are being used, and governments ensure all charitable organizations are operating honestly and fairly. 

Form 990

Every year, nonprofits must complete multiple financial reports to meet federal and state requirements. For U.S.-based nonprofits, this means completing the Form 990. This report comes in multiple formats based on your nonprofit’s size and finances. These include: 

• Form 990: Form 990 is a public form the IRS and relevant stakeholders can use to evaluate a nonprofit’s income and spending data. The standard Form 990 is designed for nonprofits with gross receipts of $200,000 or more or total assets of $500,000 or more. 
• Form 990-EZ: Nonprofits with gross receipts of less than $200,000 or assets less than $500,000 have the option of filling out the Form 990-EZ, which is an abbreviated and easier-to-fill-out variant of the Form 990. 
• Form 990-N: Similar to the Form 990-EZ, the Form 990-N is an even more abbreviated version of the form for small nonprofits. Nonprofits must have gross assets of $50,000 or less to be eligible for this form. 
• Form 990-PF: Private foundations, regardless of gross receipts or assets, must file the Form 990-PF. 

There is no equivalent form at the state level, but nonprofits should be aware of due dates for their charitable solicitation registrations, which vary from state to state. Some states require nonprofits to file multiple annual forms, each with its own deadline, to maintain charitable solicitation status. 

To avoid delays, ensure your nonprofit has strong data hygiene practices in place. This will help keep your financial information organized and limit potential discrepancies. For instance, you might work with an external accounting firm to complete an annual audit or direct your in-house financial management team to routinely compile monthly reports. 

Donation Receipts

Along with reporting finances to the government, nonprofits also have a responsibility to help donors accurately report charitable contributions on their taxes by providing donation receipts. 

Donation receipts are written acknowledgments of a charitable contribution of $250 or more. However, it’s best practice to provide all of your supporters with donation receipts (regardless of gift size) for their personal records. 

These receipts must include:

• Your nonprofit’s name
• The monetary amount contributed
• For non-cash donations, a description of the donated item or service
• A statement that no goods or services were provided by your nonprofit in exchange for the donation or a statement that any goods and services provided in return were of negligible tangible value

Your fundraising and donation management software should assist you in generating and sending out these receipts automatically. Additionally, maintaining accurate records of individual contributions can help your nonprofit connect with donors in the future.

Program-Related Reporting

Nonprofits in various fields are required to complete compliance reports to maintain transparency and demonstrate their effectiveness. Specifically, nonprofits in the healthcare and human services sectors must complete reports that include or draw from sensitive information about the individuals they serve. 

If your organization falls into one of these categories, case management software can help you record relevant data about the individuals you serve and generate reports through:

• Compliance report templates. Many case management platforms include templates for common types of compliance reports required by healthcare and human services agencies. 
• Security measures. Given the sensitive nature of healthcare and human services nonprofits, case management software also helps these nonprofits maintain proper data security. Ensure your tools include security measures like controlled access, two-factor authentication, complex passwords, and inactivity checks. 
• Form templates. Along with compliance report templates, many case management solutions provide basic form templates for data collection. These allow you to collect all the data you need from individuals who enter your programs and record it securely in your CRM. 

Be aware that deadlines for various program-related compliance reports vary, especially for nonprofits that operate in multiple states. If this applies to your nonprofit, software can be particularly helpful for automating several parts of the reporting process. Additionally, many of these nonprofits rely on grant funding, which comes with specific reporting requirements from funders. 

Stakeholder Reports

While not legally required, nonprofits should consider completing impact and annual reports to inform stakeholders about their latest projects and maintain transparency. Impact reports typically describe the results of a specific program or service your nonprofit provides, while annual reports give a broad overview of your activities and finances for the year.

When it comes to creating these reports, nonprofits should:

• Report data in an accessible format. Share data about your programs and finances in visual formats whenever possible. Graphs and other visualizations help supporters quickly process information, allowing all stakeholders to understand your nonprofit’s accomplishments at a glance. 
• Limit jargon. Even when completing reports for an expert audience like grantmakers, limit jargon and other overly complex language. Provide definitions for technical terms and offer examples to explain processes your audience may be unfamiliar with. 
• Provide qualitative and quantitative data. Raw measurements are often difficult to conceptualize. This is why educational articles often provide points of comparison, such as measuring distance in football fields rather than just miles. In your reports, provide tangible examples of your nonprofit’s work alongside hard data to help stakeholders understand how your work translates to real-world impact. 

Similar to legally required reports, these types of documents require organized, accessible data. Additionally, gaining experience completing reports for external stakeholders can set your nonprofit up for success when applying for grant funding. 

In Conclusion

Nonprofit reporting requirements change every year, and it’s your nonprofit’s responsibility to stay up to date with rulings relevant to your organization. If you need assistance with maintaining compliance, completing relevant reports, or registering your nonprofit, consider working with a legal agency that specializes in nonprofits. 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.