The Public Information and Annual Reporting standard takes the current Financial and Annual Reporting standard and builds upon it. At the heart of this standard is the idea that to build trust with donors, a nonprofit needs to share its story in a clear, meaningful manner. The philosophy picks up on this notion with more detail:
Nonprofits that provide information to prospective donors and other constituents promote informed and responsible philanthropy. Donors are better able to make decisions when they can learn what a nonprofit’s purpose is, who governs it, how they manage their financial resources, who the nonprofit serves, and what progress it has made towards its mission.
The nonprofit complies with the legal requirements for public disclosure of the following:
- 3 years of the nonprofit’s IRS Form 990, 990-EZ or 990T;
- The nonprofit’s IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.
The nonprofit also provides the following information in an annual report, by request, or as part of its website:
- The nonprofit’s mission statement.
- A list of the nonprofit's board of directors.
- Annual financial statements prepared in conformance with Generally Accepted Accounting Principles (GAAP).
- A summary of the total cost of each major program and the nonprofit’s fundraising and administrative costs as defined by either GAAP or as defined by IRS guidance for completing the IRS Form 990.
- Descriptions of its program, activities, accomplishments and achievements in relation to its mission for at least the most recent fiscal year
- Description of the communities or populations served, and the geographic area served.
If the nonprofit has a web site, the above information should be found on the nonprofit’s web site, preferably in one place so that the same content can be reliably printed and mailed upon request.
Although the list of things required by the standard may seem longer than the current standard, it’s actually not that much different. What is different is how a nonprofit can share this information. Whereas before the printed annual report was the main vehicle for sharing with donors and constituents a nonprofit’s story, more and more organizations are moving away from that to save costs. The standard recognizes this and the role a nonprofit’s website plays in conveying information.
If your organization has moved away from a printed annual report, we’d like to hear from you. Why was the decision made? How has it changed the way you communicate with your constituents?
Next up: Impact on the Community