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Nonprofit Finance & Philanthropy

Reading a Nonprofit's Financial Statements

Where to actually find a nonprofit's financial information, and what the key numbers mean before deciding to donate.

In the U.S., most tax-exempt nonprofits are required to file a Form 990 annually with the tax authority, disclosing revenue, expenses, executive compensation and other financial details publicly - making it one of the most useful, and most underused, tools available for evaluating any specific nonprofit before donating.

What the Form 990 actually shows

A Form 990 reports total revenue by source, total expenses broken down by category, compensation for the highest-paid staff, and the organization’s net assets - what it owns minus what it owes, similar to net worth for an individual. Most Form 990s are publicly available for free through nonprofit databases and watchdog organizations.

What a quick look can reveal

Comparing a nonprofit's total revenue to its total expenses over several consecutive years on its Form 990 can reveal whether the organization is running sustainable surpluses, breaking even, or consistently spending down its reserves - a pattern that's genuinely difficult to assess from marketing materials or a website alone, but shows up clearly in the actual filed numbers.

The statement of activities

A nonprofit’s statement of activities - roughly equivalent to an income statement for a for-profit business - lays out revenue and expenses over a specific period, distinguishing between restricted and unrestricted funds along the way. Reviewing this alongside the Form 990 gives a more complete financial picture than either document alone.

Never actually looking at the numbers before donating

Many donors decide where to give based entirely on a nonprofit's marketing, mission statement, or personal connection, without ever checking the publicly available financial filings. A few minutes reviewing a Form 990 - which is free and public - can surface real information about financial health and spending patterns that marketing materials alone simply won't show.

Key takeaways
  • U.S. nonprofits generally must file a public Form 990 disclosing detailed financial information annually.
  • The 990 shows revenue by source, expenses by category, executive pay and net assets.
  • Comparing several years of filings reveals trends that a single year, or marketing materials, won't show.
  • Checking public financial filings before donating is a genuinely accessible, underused step.
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