Use THIS To Decide Whether To Work With Nonprofit Clients
What if, before you walk through the check-out line, or even letting you in the door, your local grocery store could examine your 1040 tax form? Besides being a bit (okay, a lot) creepy, they could decide that they didn’t want to serve you as a customer, or if they did, charge you more or less because of what they found.
Well, you can. By law, in the United States your nonprofit clients are required to make their tax returns public. And Guidestar.org, among others, makes them easy to see – for free.
Do you check your client’s 990 before you quote them a price for your work? Is there other information in a 990 that you should know?
Here’s a short list of what you could be interested in:
1) Total revenues – are they a start up, established, in deficit or ran a surplus?
2) Fundraising – do they fundraise (some nonprofits don’t) and if so, how much and what percentage is that of their total revenue and what is it compared to what they spend on fundraising?
3) Other revenue – What percent of revenue comes from government contracts and client fees?
4) Vendors – Who was their highest paid outside vendor? Would you show up on that list if you worked with them? Do you want to be on that list?
5) Their Board – Who is on their board? Do you know anyone either personally or by reputation? Is it “friends and family” or strong enough to support the programs you’ll work with? Do you see any problems?
6) Their Mission – Is their explanation of their mission consistent with what you publicly understand about the organization?
7) Pay – Is the rate of pay for their top staff in line with other organizations like theirs in your region?
8) Problems – Do they show any financial issues that might stand in the way of your getting paid?
You might come up with more depending on the service you offer or why you think they could be a prospective client. The 990 can be your best friend, to either assure you that you have a solid client who needs your specialty for all the right reason, or warn you to politely say “sorry, I’m busy” and avoid what could be a problematic client engagement.