If you work with nonprofits, you’ve probably heard of IRS Form 990. Savvy grant seekers and grant writers read this form closely. It offers a clear snapshot of how a nonprofit operates, how it spends money, and how transparent it is. Knowing how to read Form 990 can strengthen your grant research and help you build stronger applications.
Experienced grant writers understand that winning grants is not just about compelling narratives. It is also about accuracy, consistency, and credibility. The professional writers at GrantWriterTeam regularly analyze Form 990s to better understand an organization’s financial structure, revenue sources, governance, and program priorities before drafting proposals.
Why Form 990 Matters for Grant Seekers
Form 990 tells a story. It shows how a nonprofit governs itself, funds its programs, and measures success. Grantmakers rely on this document to assess transparency, accountability, and alignment with their funding priorities.
For grant seekers, understanding Form 990 is a strategic advantage. It helps you research funders, evaluate potential partners, and anticipate questions during the application process.
GrantWriterTeam works with nonprofits and grant seekers who want to approach funding with confidence. Learning how to read and interpret Form 990 is one more way to strengthen your grant strategy and stand out in a competitive funding landscape.
Below is a simple breakdown of each major section and why it matters.
Part I: Summary
Part I provides a high-level overview of the organization. This section includes basic identifying information, a brief mission statement, and key financial figures such as total revenue, expenses, and assets. Grantmakers often start here. It tells them, at a glance, what the organization does and how financially healthy it appears.
Part II: Signature Block
This section confirms accountability. An authorized officer signs the return under penalties of perjury, verifying that the information is accurate to the best of their knowledge. For funders, this signature signals responsibility and oversight at the leadership level.
Part III: Statement of Program Service Accomplishments
Part III explains the organization’s mission in action. It highlights the three most significant programs and describes how they advance the mission. This section also includes related expenses and measurable outcomes. Grantmakers look here to see real impact, not just good intentions.
Part IV: Checklist of Required Schedules
This section uses a series of yes or no questions to determine which additional schedules must be completed. These schedules provide deeper detail on finances, governance, and activities. While technical, this checklist helps ensure full disclosure and compliance.
Part V: Statements Regarding Other IRS Filings and Tax Compliance
Part V addresses compliance beyond Form 990. It covers employment taxes, unrelated business income, and other required filings. Consistent compliance reassures funders that the organization manages its obligations carefully and avoids unnecessary risk.
Part VI: Governance, Management, and Disclosure
This is one of the most reviewed sections by grantmakers. Part VI outlines the organization’s governing body, leadership structure, and internal policies. It includes information about conflict of interest policies, whistleblower protections, and document retention practices. Strong governance builds trust.
Part VII: Compensation of Key Individuals
Transparency matters when it comes to compensation. This section details pay for officers, directors, trustees, key employees, and highly compensated independent contractors. Grantmakers use this information to assess whether compensation is reasonable and aligned with the organization’s size and mission.
Part VIII: Statement of Revenue
Part VIII breaks down all sources of income. This includes contributions, grants, program service revenue, investment income, and other revenue streams. Funders review this section to understand how diversified the organization’s funding is and how dependent it may be on certain sources.
Part IX: Statement of Functional Expenses
This section shows how money is spent. Expenses are categorized into program services, management and general costs, and fundraising. Grantmakers often compare these ratios to assess efficiency and mission focus. Clear, balanced spending can strengthen funding confidence.
Part X: Balance Sheet
Part X compares assets, liabilities, and net assets at the beginning and end of the fiscal year. This financial snapshot helps funders evaluate stability and growth over time. It also reveals how well the organization manages its resources.
Part XI: Reconciliation of Net Assets
This section explains changes in net assets from one year to the next. It reconciles figures reported elsewhere in the form, ensuring consistency across financial statements. Accuracy here reinforces credibility.
Part XII: Financial Statements and Reporting
Part XII addresses accounting methods and financial oversight. It notes whether the organization uses cash or accrual accounting and whether financial statements were audited or reviewed. Audits and formal reviews often increase funder confidence.
The Bottom Line
By reviewing 990s, grant writers can identify strengths to highlight, anticipate questions funders may raise, and ensure grant applications align with publicly reported information. This attention to detail helps nonprofits present a clear, trustworthy story across grant proposals, budgets, and supporting documents.
About GrantWriterTeam
Are you a nonprofit or small business in need of some help? If you are searching for grants but are feeling overwhelmed, hiring a grant writer may be the perfect choice for you! Grant writers thoughtfully grant opportunities and consider the pros and cons of applying and the chance of success. Consider your writer an extension of your organization. They will coach you throughout the entire process and curate the project to fit your needs. Your grant-seeking success is our priority at GrantWriterTeam.
Disclaimer: There is no guarantee that grants will be awarded as a result of this information.