Apart from raising funds and fulfilling its mission, a nonprofit organization is required to fulfill several reporting tasks. Completing the reporting requirements is relatively easy. Staying on top of them . . . Well, that's another story.

The key to maintaining a handle on your organization's reporting requirements is to become acquainted with the rhythm of the reporting cycle. Like a business, most of your reporting will be due following the close of the organization's fiscal year. However, there are also some reporting tasks that need to be performed on a regular, monthly basis.

Financials

Even though your organization doesn't exist to earn a profit for shareholders, you still need to meticulously document and report financial information. The most common financial reports for nonprofits are the statement of activities (income and expense) and the balance sheet (assets). Some organizations also find other reports such as cash flow statements helpful. Financial reports are usually prepared on a monthly or quarterly basis for board members, donors, and others who have a stake in the organization's financial condition. Fortunately, there are a variety of software programs that will make your job a little easier. These programs - designed exclusively for nonprofits - are capable of tracking donors, recording contributions and expenses, and preparing the appropriate financial reports.

Annual Report

Nonprofit entities are also expected to prepare an Annual Report. The Annual Report is completed at the end of the fiscal year, and describes the activities and accomplishments of the organization throughout the reporting period. The decision about whether or not to include financial information in your Annual Report is entirely up to you, but most donors will expect financial information to be readily available even if it isn't included in the Annual Report document itself. From a practical standpoint, a lot of nonprofits use the Annual Report as a marketing tool to highlight the organization's achievements and generate enthusiasm for its mission.

Form 990

Although nonprofit organizations aren't required to pay federal income tax, they are required to file an annual form with the IRS. The vehicle for this is Form 990, Return of Organization Exempt from Income Tax and it is due on the 15th day of the 5th month following the close of the organization's fiscal year. It is possible to receive a three-month extension by filing Form 8868 before the due date. The form itself is approximately nine pages long and is fairly comprehensive including requests for information about contributions, expenses, assets, and the organization's board of directors. Despite its length, you should be able to complete the form without professional assistance, but don't be afraid to consult an accountant if you need help.

You may also find it necessary to fulfill other reporting requirements for your organization. Reports such as payroll withholdings and insurance reports are standard fare for nonprofits. The good news is that these types of reports don't involve any special requirements for nonprofits but usually fall under the same reporting procedures as for-profit businesses.