Making the Most of Your Form 990: Strategies for Transparency, Compliance, and Impact

ARTICLE | August 29, 2025

Authored by Aprio, LLP

Your organization’s Form 990 is more than a tax compliance document; it’s a powerful storytelling tool that nonprofits can use to showcase to potential donors and the community at large their mission, programs, and impact.

As a public-facing form, it’s accessible via the IRS, GuideStar, Charity Navigator, and often directly on an organization’s website. This visibility makes it essential to approach Form 990 with both compliance and clear communication in mind.

Elevating Your Narrative: Program Service Accomplishments

The heart of Form 990 lies in Part III, where organizations describe their top three program service accomplishments. All organizations must describe their accomplishments for each of their three largest program services, as measured by total expenses incurred. If an organization has more than three programs, it can report on Schedule O any additional activities that it considers of comparable or greater importance.

Form 990, Part III should go beyond generic statements. For each program service reported, accomplishments should be described through specific measurements such as clients served, days of care provided, number of sessions or events held, or publications issued. Give reasonable estimates for any statistical information if exact figures aren’t readily available but indicate that this information is estimated.

For example:

• “We distributed 89 million pounds of food to over 500 agencies, reaching 800,000 individuals across 18 counties.”
• “Our literacy program served 1,200 students across 15 schools, improving reading scores by 18%.”

If your organization supports other nonprofits, be transparent about your role and don’t claim credit for services delivered by grantees.

Do not assume the language remains unchanged from last year and focus on clarity and purpose. It may be beneficial for an organization’s marketing team to review and revise this language annually. Having another person read a description can help prevent potential oversight due to familiarity with the text.

Schedule O: Your Blank Canvas

Schedule O allows nonprofits to expand on key areas of the return, including:

• Program impact and growth
• Governance practices
• Executive compensation
• Fundraising outcomes
• Public support test challenges

Use this space to provide context and clarity. For instance, if your public support dipped due to a one-time grant, you could use either Schedule A or Schedule O to outline your plan to diversify funding.

Public Support Test: Why It Matters

Schedule A is used to describe the reason for public charity status and to compute the percentage of public support received. It is a required schedule if the organization is a 501(c)(3) that receives a substantial part of its support from the general public either through contributions and government grants or via the program services it provides.

• Part I is where organizations attest the reason for their public charity status. They attest that they are not private organizations by selecting one out of twelve boxes. The reason can be the same as stated in the organization’s tax-exempt determination letter from the IRS or it can be different.

The box selected in Part I determines what other part of Schedule A an organization has to fill out:

• Part II is the support schedule for organizations that checked a box in Part I, on lines 5, 7, 8. These organizations receive a substantial part of their support from a governmental (fed, state, or local) unit or from the general public.
• Part III is the support schedule for organizations that checked the box in Part I, for line 10. These organizations receive more than 33 1/3% of their support from contributions, membership fees, and gross receipts from activities related to its exempt functions. They also receive no more than 33 1/3% of their support from gross investment income and unrelated business income.
• Part IV is completed for supporting organization indicated on line 12a, 12b, 12c, or 12d of Part I.
  • Type I: Supporting organizations supervised, controlled, or operated by its supported organization(s), typically by giving the supported organization(s) the power to appoint or elect a majority of the directors or trustees of the supporting organization
  • Type II: Supporting organizations supervised or controlled in connection with its supported organization(s) via control or management
  • Type III Functionally Integrated: A supporting organization operated in connection with, and functionally integrated with, its supported organization.
  • Type III Non-Functionally Integrated: A supporting organization operated in connection with its supported organizations that is not functionally integrated.

An organization that doesn’t check any of the boxes on lines 1 through 12 shouldn’t file Form 990, Form 990-EZ, or Schedule A (Form 990) for the tax year, but should file Form 990-PF instead.

Public support on Schedule A, Parts II and III is measured using a 5-year computation period that includes the current and 4 prior tax years (including short years). The goal of Parts II and III is to calculate a percentage of public support by dividing public support by an organization’s total support and have that percentage be 33 1/3% or more.

Organizations can switch between tests annually to maintain public charity status. If support falls below 33?% but remains above 10%, the facts and circumstances test may apply, allowing continued qualification with proper explanation but only for Schedule A, Part II.

Fundraising Events: Reporting with Precision

Fundraising events must be reported on Schedule G when organizations have more than $15,000 total of fundraising events gross income and contributions.

There is a distinction between a fundraising event and general fundraising conducted throughout the year, mainly that donors expect to receive something in return for their donation. Examples of this are galas, golf outings, and fundraising dinners.

It is important that organizations accurately calculate the value of benefits provided (such as meals, entertainment, or party favors) and disclose this to donors on a charitable receipt.

The IRS requires organizations to break out contributions included in gross fundraising receipts and place it on Form 990, Part VIII with other grants and contributions received. As such, it may appear that the event lost money on the Form 990 even if an event brought in more receipts than were offset by direct fundraiser expenses.

Common Pitfalls and Misconceptions

Several areas of Form 990 are prone to errors:

• Part V: Tax-exempt status doesn’t mean exemption from payroll taxes or 1099 reporting.
• Part VI: Ensure board governance is properly documented.
• Part VII: Distinguish between current and former employees and trustees accurately. If an employee/trustee served at any time during the calendar or fiscal year, they are not considered former per the IRS.
• Schedule C: Understand the difference between lobbying and political campaign activities.
  • Political campaign activities are those that support or oppose candidates for elective federal, state or local public office. Political campaign activities are generally not permitted for 501(c)(3) organizations.
  • Lobbying activities are those intended to influence foreign, national, state or local legislation that has been already introduced. There are two types of lobbying activities:
    • Direct lobbying is an attempt to influence legislators or their staff
    • Grassroots lobbying is an attempt to influence legislation by influencing the general public.
• Unrelated Business Income (UBTI): Monitor activities that may jeopardize tax-exempt status. Consult your tax practitioner and make sure to document all facts and circumstances.
  • Three-Part Test
    • Trade or business
    • Regularly carried on
    • Not substantially related to mission
  • Exclusions
    • Volunteers
    • Benefit/convenience of members
    • Sales of contributed property
    • Rents from real property (unless derived from a debt financed property)
    • Passive income (unless it is coming from an S Corp)
    • Sale of property (does not apply to inventory or property held in ordinary course of business)

Final Thoughts: Clarity, Accuracy, and Purpose

The Form 990 is a public facing document, making it an excellent vehicle to tell your story and get your name out there. As such, we must approach Form 990 with a critical eye. Don’t default to “same as last year.” Collaborate with your marketing teams and elsewhere in your organization to craft compelling narratives. Encourage transparency and use every section of the form strategically.

Form 990 is not just a compliance requirement—it’s a chance to inspire trust, attract funding, and demonstrate the value of your organization’s work.

Please connect with your advisor if you have any questions about this article.