Knowledge is Power: How I-990s can help your non-profit job search
Looking for a job is already a challenge, especially when the organization doesn't list the salary range and you're not sure if you're being offered compensation that is a fair reflection of the work. But there's a way to gain more insight! It's called the I-990 tax form. The I-990, commonly known as the 990, is a tax form which most nonprofit organizations are required to submit annually, and it provides access to the inner workings of organizations and thus can support the job search. If you know how to read it, a 990 can tell you what an organization prioritizes, where their money broadly comes from, how they distribute their money, and how much they pay leadership.
As folks in often underpaid and under-resourced work, sometimes nonprofits replicate the same capitalist structures that we seek to change. No matter what, in a capitalist society, money is power. Knowing what your potential new employer cares about and how they will compensate you is essential to deciding if an opportunity is right for you financially (don't forget to calculate your salary number). Whether in the initial application process or during a job negotiation, a 990 is one of our most powerful job searching tools. But you have to know how to find it and how to read it.
Where to look
Some nonprofits will post their financial documents (including the 990) on their website, so donors and funders can easily review it, whereas others either lack the technical resources or are intentionally withholding it. Some organizations, particularly well-resourced ones, list their I-990 under the Financials section of their websites.
Alternatively, 990 forms are shared and searchable on public databases such as GuideStar by Candid or ProPublica. Often the I-990s of smaller, under-resourced organizations with minimal online presence or larger, less transparent organizations can be found there. Through a simple search, you will find your potential employer’s I-990. If the organization is fiscally sponsored, the fiscal sponsor's 990 is the one that will be listed. Typically, the three most recent fiscal years of data will be listed, which often differs from the calendar year due to different accounting cycles from one organization to the next. The I-990s often take six months to a year to become available because the federal tax filing deadline is on May 15th and organizations can request extensions as needed. Once you have located the form, the true fun begins!
What to look for
For the purpose of job searching, there are a few key areas to focus on that will give you a clear view of your potential new organization. I-990s contain so much information, so do not worry if you feel overwhelmed. Due to the complexity of the U.S. tax system and related laws, tax forms are purposefully confusing and can be challenging to navigate as a reader with little or no accounting experience. Furthermore, the non-profit industry can create further problems by limiting access to their tax forms and not educating staff on what information they contain and what that information means, which can be used as a gatekeeping tool.
Summary
The Summary section, aka Part 1, provides an overview of the financial status of your potential employer. It includes Lines 1-7 (Activities and Governance), 8-12 (Revenue), 13-19 (Expenses), and 20-22 (Net Assets or Fund Balances).
First, let’s look at the Lines 13-19 (Expenses). Depending on the type of work of the organization, it is essential to see how much of the money directly supports the organizational mission versus compensating the executive leadership and other costs such as fundraising.. Additionally when reviewing the total number of employees, this information can help to assess the distance between an offer or potential offer and the salary of the department head or leadership. Although the salary information of lower-level staff, who might be making minimum wage, is not disclosed, you can review the total amount spent on salaries and other compensation in Line 15 of Part 1 with the combined total of the highest compensated employees listed in Part VII, Section A, Line 1a. For instance, organization X has 50 employees and compensates them a combined $1,000,000. The five executive members, which comprise only 5% of the total staff, received a combined $500,000 in compensation, which comprises 50% of the budget. If this is the case, it is unlikely you will be fairly and equitably compensated for your work as the organization has demonstrated that it values the labor of the few highest level staff over the many.
Key information includes:
Line 3: The number of members in the governing body
Lines 5 and 6: The total number of employees and volunteers
Information about the Revenue is outlined in Lines 8-12 and shares information about how the organization obtains the funding necessary for its work. They can come from a variety of funding sources such as grants from foundations or governments, individual donations, earned income for services, or endowed investment income. The distribution of this revenue is based on the type of work the organization does (i.e. non-profit health clinic or human rights organization). The potential funding sources that will be listed are:
Line 12: Total revenue, which is divided into:
Line 8: Contributions and grants
Line 9: Program service revenue
Line 10: Investment income
Line 11: Other revenue
The Expenses are outlined in Lines 13-19 provides information on how the organization is spending its funding.
Line 13: Grants and similar amounts paid
Line 14: Benefits paid to or for members
Line 15: Salaries, other compensations, employee benefits
Line 16a and 16b: Professional fundraising fees
Line 17: Other expenses
Based on this information, a few comparisons can be made by juxtaposing information from different lines. Key areas to review are:
Line 14: the benefits paid to or for members compared to Line 15: salaries, other compensation, and employee benefits (how much they spend on direct service costs)
Line 15: salaries, other compensation, and employee benefits (how much they can compensate you) to Line 16a/b: the professional fundraising fees (how much they spend to make more money).
Compensation of Highest Paid
Part VII: Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors outlines exactly what it says. As a job searcher, you will learn about the top line of the budget in Section A and Line 1a, the organization's ability to pay you what you deserve, and whether there is a chasm between leadership and frontline staff. If you're replacing a staff members' position that is listed in Line 1a of Section A, this is a good way for you to know what the person before you was making in a particular year, so you can base your salary on this information.
For small organizations, you might discover that the executive director makes less than or similar to what you are seeking to be paid (which is listed on Line 1a of Section A), which could indicate that they might not have the budget to support your salary requirement. It's still always good to make a direct ask, since by nature, the 990 is not the most up-to-date picture of their financial situation.
For larger organizations, you may find that there is a clear divide between executive staff salaries and employees on the lower levels. This can be assessed by looking at and totaling the compensation listed for the top earning employees in Section A, Line 1a. This number will inform you of what percentage the few top earning employees receive of the total budget. The percentage can help you discern how large the divide is between the highest and lowest paid employees is and therefore how much pay inequity likely exists within the organization. Additionally, in Column F of Section A, Line 1a, the 990 lists any other compensation the employee received. This likely constitutes a bonus and can further illuminate if there is a large divide between leadership and lower compensated employee pay.
To further fill out the picture, Section B, Line 1 provides similar information on the five highest compensated independent contractors. The compensation for contractors (Column C) as well as a description of their services (Column B) can provide further context into what the organization values and how they compensate their staff. Often individuals are paid as independent contracts due to their niche and technical role or the different tax obligations associated with the role.
Wow that’s a lot of math
Yes, it takes a lot of math and patience to read and understand the information presented in 990s. If you're short on time and/or don't want to break out a calculator, that's ok. If you have questions or want to talk more, I'm happy to talk more on twitter.
Other areas of note
Part III: Statement of Program Service Accomplishments
This includes a brief summary of the organization's mission (Line 1) and accomplishments (Lines 4a-4c) over the last fiscal year, which can be used to further confirm if your own values align with their mission.
Part VIII: Statement of Revenue
This includes a more detailed summary of how the revenue was earned including from government grants or rent, which can be used to ensure they have an ethical and values-aligned business model. It is broken down into the following categories:
Line 1: Contributions, Gifts, Grants, and Other Similar Amounts
Line 2: Program Service Revenue
Lines 3-11: Other Revenues
Part IX: Statement of Functional Expenses
This includes a more detailed summary of how money is spent from payroll taxes to 401(k) contributions. This can help you to discern if both the compensation is appropriate and if they are directing resources in a way that you find appropriate. Some notable lines include:
Line 1: Grants and other assistance to domestic organizations and domestic governments
Line 2: Grants and other assistance to domestic individuals
Line 3: Grants and other assistance to foreign organizations, foreign governments and foreign individuals
Line 4: Benefits paid to or for members
Line 5: Compensation of current officers, directors, trustees, and key employees
Line 7: Other salaries and wages
Line 8: Pension plan accruals and contributions
Line 9: Other employee benefits
Line 11: Fees for service (non-employees)
Line 12: Advertising and promotions
Line 16: Occupancy (rent)
Line 17: Travel
Line 18: Payments of travel or entertainment expenses of any federal, state, or local public officials
Line 21: Payments to affiliates
Bridget Sakowski is a lover of receipts and non-profit accountability after spending her entire career in the non-profit industrial complex. After working in international human rights for a number of years, Bridget now working as a clinical social worker helping to support clients however she can. Please feel free to reach out to her on twitter @BridgetSakowski for any and all 990 questions.