How to Read a Form 990-PF: A Guide for Nonprofits Searching for Grants

When you look at a Form 990-PF for the first time, you might expect it to be just another document filled with numbers and tax terms.

But the form includes some of the best tools for researching a foundation.

You can discover the foundation grant recipients, what the foundation has funded, their geographic giving patterns, how large their grants are, who runs the foundation, whether the foundation has an application process, and more.

In other words, a Form 990-PF is not simply an information document for the tax authorities.

It is a history of the actual use of the money.

And that makes a difference, because the description of the foundation’s interests, provided by the foundation itself, only tells you so much.

Grant history shows you whether the foundation distributes grants to your cause.

Once you have created your prospect list, read our guide on how to find foundations for grants to choose foundations worth investigating.

After that, the Form 990-PF can help you qualify foundations, determining whether it deserves a place in your outreach list.

What Is Form 990-PF?

Form 990-PF is the annual information return of U.S. private foundations and certain charitable trusts treated as private foundations.

The information included in the filing consists of revenue, expenses, assets, charitable distributions, leadership, activities, and grants.

Most of the data in a Form 990-PF is publicly available, which makes the document a powerful tool for research.

For grantseekers, the 990-PF answers such important questions as:

Who has this foundation funded?
Where are its recipients located?
What causes do they support?
How much do they typically award?
Who runs the foundation?
Do they provide information about applying?
Does their past giving history match our nonprofit?

All this data can be combined with other foundation research to qualify the foundation for further outreach.

Form 990 vs. Form 990-PF: What Is the Difference?

There are several versions of Form 990. But Form 990-PF is one of the most popular and relevant ones.

Form 990 is generally filed by public charities and other tax-exempt organizations.

Form 990-PF is specifically used by private foundations and certain charitable trusts treated as private foundations.

So, if you want to study how a U.S. private foundation uses its charitable dollars, a Form 990-PF is one of the most important documents for you.

The Most Useful Parts of a 990-PF for Grant Seekers

You do not have to read everything in the form from cover to cover.

Instead, you should focus on the sections that will help you find out whether the foundation qualifies for further outreach.

What You Want to Know	Where to Look	What It Can Tell You
How large is the foundation?	Heading and Part II	Foundation assets and financial scale
How much did it give?	Part I	Total contributions, gifts, and grants paid
Who received grants?	Part XIV	Previous grant recipients
What were grants for?	Part XIV	Purpose of grants
How much did recipients receive?	Part XIV	Individual grant amounts
Are future grants already approved?	Part XIV	Grants approved for future payment
Can organizations apply?	Part XIV	Application procedures and restrictions
Who runs the foundation?	Part VII	Officers, directors, trustees, and foundation managers
How is its distribution requirement calculated?	Parts IX–XI	Minimum investment return, distributable amount, and qualifying distributions

In most cases, Part XIV is likely to be the most frequently visited section of a 990-PF.

One important note: Part XIV is generally required when a foundation has $5,000 or more in assets at some point during the tax year, so this section may not contain the same level of information on every filing.

Start With the Basic Information About the Foundation

Before looking into grants, you should make sure that you are reviewing the right foundation.

Private foundations can have quite similar names, particularly when they are named after individuals or families.

Compare the following characteristics of the foundations:

Name
Address
Employer Identification Number
Tax year
Foundation type
Fair market value of assets

The asset data can give you the idea about the financial scale of the foundation.

But do not make the mistake of thinking:

Large assets = good funding prospects.

A very large foundation that has no history of funding your cause can be a weaker prospect than a small family foundation that gives to nonprofits like yours on a regular basis.

This is one of the biggest shifts you should make when qualifying foundations for grants.

Do not assess a funder based on the financial data only.

Look at how they give.

Part I: How Much Did the Foundation Give?

Part I includes the data on revenue and expenses.

The number of total contributions, gifts, and grants paid can give you a quick overview of the foundation’s charitable contributions in that tax year.

That number provides you with context.

But that number does not tell you everything.

Consider two foundations with large assets.

The first distributes millions of dollars among dozens of nonprofits.

The second makes a relatively few highly concentrated grants.

Without studying the grants, you cannot understand which of these foundations is a better prospect.

That is where the Form 990-PF comes in handy.

Part II: Understanding Foundation Assets

Part II contains the balance sheet of the foundation.

Depending on the foundation, you may see the following assets:

Cash
Savings
Investments
Stocks
Bonds
Real estate
Other investment assets

As a grant researcher, you are generally not required to perform an accounting analysis of every asset.

You need this data to understand the financial situation of the foundation.

Ask yourself the following questions:

Is this a small family foundation or a large private foundation?
Are their assets increasing or decreasing?
Do they have substantial financial resources?
How does its grant history relate to its financial condition?

The key is not to waste time on the impressive numbers.

Assets tell you what a foundation has. Grant history tells you what they fund.

And, when you are researching funding opportunities, the second point is usually more important.

Part VII: Who Runs the Foundation?

In Part VII, you can find information about people working with the foundation, including officers, directors, trustees, and foundation managers.

From a grant researcher’s perspective, the following information is important:

Directors
Trustees
Officers
Foundation managers
Family names that appear frequently

Why is it important?

Because foundations are organizations, but they are operated by people.

A trustee can also be a member of the board of another nonprofit.

A director may be active in your community.

Someone on your board may have a real professional connection with the foundation’s leader.

Such a connection can provide you with useful context about the foundation.

But there is an important point here.

Do not start sending emails to every trustee listed on a tax form.

Identify real professional or nonprofit or community connections that allow you to better understand the foundation.

Part XIV: Where Grant Research Gets Interesting

If your primary goal is finding grants, Part XIV deserves special attention.

Here, you can find information on the grant history, application procedures, restrictions, grants paid during the year, and grants approved for future payments.

At this point, a tax document transforms into a tool for grant prospecting.

Can You Apply to the Foundation?

Before you start preparing any documents, you should find out whether the foundation accepts applications.

The foundation may provide the following information:

Instructions on submitting an application
Deadlines
Geographic restrictions
Organizations it supports
Funding limitations
Grant programs
Application procedures

It may also state that it makes grants only to preselected organizations and does not accept unsolicited funding proposals.

That is important.

If a foundation does not accept applications, this does not mean that you can find its email address and send a full proposal regardless.

Your strategy changes.

You should research the grant history, understand how the grantees of the foundation fit, identify legitimate connections, and learn the process of adding organizations to the funding portfolio of the foundation.

For further information on this strategy, check our guide on invitation-only grants for nonprofits.

Who Did the Foundation Fund?

This is one of the most important questions you can answer using the 990-PF.

First, you should look through the organizations receiving grants.

Then, you should consider the following questions:

Are any of them similar to our nonprofit?
Do they serve the same population?
Do they work in the same field?
Are they located in our community?
Do they run programs similar to ours?
Are they similar to us in size or scope?

The presence of one similar recipient is interesting.

The presence of several similar recipients reveals a pattern.

What we see in foundation research: the mission of a foundation is the starting point. But its grant history shows you who it funds, where it gives grants, how large its grants are, and whether there are organizations similar to yours in its giving history.

That is why the grant history is valuable when you are using a grant search engine for nonprofits.

Instead of searching for foundations stating that they support your cause, you should find foundations that proved it through their grants.

Where Does the Foundation Give?

Do not assume that a foundation gives grants only to nonprofits close to its office.

Look at where the recipients are located.

You may learn that the foundation:

gives grants almost exclusively within one city
focuses on one state
funds several neighboring counties
funds nationally
supports organizations across the country
has a very specific geographic pattern

It is important because the geographic alignment is equally important with mission alignment.

A foundation may strongly support the programs in youth mental health but fund only those organizations operating in one particular state.

Another foundation supports dozens of different causes but regularly funds nonprofits in your county.

Both mission fit and geographic fit are important.

What Does the Foundation Fund?

Consider the stated purpose of individual grants.

You may see grants supporting the following programs:

General operating support
Specific programs
Scholarships
Medical research
Youth services
Capital improvements
Community programs
Education
Equipment
Capacity building

This allows you to move beyond the general mission statement of the foundation.

A foundation may describe its interests as “education.”

The grant history may reveal that most of the grants in that category actually fund scholarships.

Another foundation may discuss “community development” in a rather vague way but repeatedly fund food security programs.

That is much more useful information when you want to know whether your project can qualify.

How Large Are Grants of the Foundation?

It is important to understand how large the grants of the foundation are.

But you should not take the largest grant listed as the number you should use when considering how large your grant request should be.

You should see the general pattern.

If most grants range between $5,000 and $15,000, a grant of $150,000 is not realistic.

If most grants are substantially larger, a very small grant request may not suit the pattern.

Ask yourself the following questions:

What is the common grant range?
Are there any unusually large grants that may distort the picture?
Do repeat recipients receive larger grants?
Are grants for certain causes made at a different level?
Is there any change in the average grant amount?

This information is helpful when you start preparing a Letter of Inquiry.

Look for New vs. Repeat Recipients

nonprofit organization volunteer gathering

This is one of the most important aspects of grant research.

You should consider several years of grants and split the recipients into two categories:

Repeat recipients

Organizations receiving grants regularly.

New recipients

Organizations getting grants for the first time.

Why is it important?

A foundation making grants to almost the same nonprofits year after year operates differently from the one that regularly brings new recipients to its portfolio.

The fact of adding new recipients does not guarantee that your organization can apply to the foundation.

But you can see that the foundation changes its funding portfolio.

That can be especially useful when you are researching foundations without a clear application process.

Look at Several Years of Grants

One 990-PF is a snapshot.

Several filings reveal a pattern.

Whenever possible, try to find the grant history for three to five years.

Look for:

Repeat recipients
New recipients
Change in grant amounts
Geographic pattern
Change in funding interests
Causes that receive more funding
Programs that disappear
Multi-year relationships

A foundation may make a very unusual grant having little to do with its usual funding.

If you look at only one year, you may overestimate the alignment of your nonprofit.

Several years provide much more context.

What Does the 5% Private Foundation Rule Mean?

You may have heard that private foundations are obligated “to give away 5% of their assets every year.”

But the common 5% explanation is an oversimplification of the 5% minimum distribution requirement.

It is generally based on 5% of the fair market value of certain assets not being used directly for charitable purposes, with some adjustments including applicable acquisition indebtedness.

That figure is used to calculate the distributable amount of the foundation.

Parts IX, X, and XI deal with:

Minimum investment return
Distributable amount
Qualifying distributions

Private operating foundations are treated differently, which is another reason why the 5% rule should not be applied as a general rule to all private foundations.

And there is another distinction:

Qualifying distributions are not limited to the grants made to other nonprofits.

They include certain direct charitable expenditures, charitable-use assets, program-related investments, qualifying administrative expenses, and certain set-asides.

For grant prospecting, you do not have to calculate these figures.

What really matters is the foundation’s actual grantmaking and charitable distribution history.

That is not all you need to know about a foundation’s giving obligations.

There is more to the formula.

Understanding Form 990-PF for Nonprofit Grant Researchers

The information provided by the 990-PF form goes beyond what any single number can tell you.

Here are the things you should know.

Reading a 990-PF Form Like an Experienced Grant Researcher

You are not an auditor.

But you still have important questions to answer when researching a 990-PF.

These questions can guide your analysis.

Questions	Look for
Does this foundation fund our issue area?	Similar grants and grant recipients
Does this foundation fund our location?	Location of grant recipients
Does this foundation fund nonprofits like ours?	Similar grant recipients
How much would be reasonable to request?	Average of historical grants
Does this foundation fund new organizations?	New vs. returning grant recipients
Do we qualify?	Application procedure
Who runs the foundation?	Officers, directors, and trustees
Is this foundation actively giving?	Historical grants and charitable distributions

Armed with the answers, you can decide whether this foundation belongs in your funding prospects pipeline.

What Form 990-PF Can’t Tell You

A 990-PF is very useful, but it is no crystal ball.

It will not tell you:

What the foundation is interested in funding currently.
If its priorities have changed recently.
Why one particular nonprofit receives funding from this foundation.
Why one particular nonprofit was denied funding by this foundation.
Whether the foundation wants to meet your nonprofit.
If there is an existing relationship behind an award.
Whether your nonprofit will get the funding.

Keep in mind that the 990-PF provides information on the foundation’s operations in the previous tax year.

So, in order to conduct your due diligence research properly, you will also want to review current information about the foundation, including:

Its current website.
Information about its application procedure.
Current announcements.
Professional/community connections.
Historical grant records.
Contact information.

Use all this information to qualify the foundation before applying.

Grant Advance’s Role in Foundation and 990-PF Research

Finding useful information in individual 990-PFs can be a very valuable tool.

Reviewing dozens or even hundreds of 990-PFs manually – that is quite a challenge.

Grant Advance will assist nonprofits in searching and analyzing private foundation and historical grant information to save time for proper prospect evaluation.

Using Grant Advance, nonprofits can:

Search private foundation profiles.
Review historical grants.
Research grant recipients.
Analyze giving patterns.
Search by geographic location.
Analyze grant amounts.
Research foundation officers.
Save potential funders.
Manage foundation prospects.

Our foundation search engines for nonprofits allow organizations to find potential funders by historical grant information, geographical location, keywords, grant amounts, grant recipients, etc.

Then, using Foundation Profile Pages nonprofits will be able to gather and review the necessary information to determine whether they qualify as a good potential funder or not.

Our goal is not to substitute the foundation research.

We just want to make the information more available for use.

FAQs about Form 990-PF

What does Form 990-PF tell me about a private foundation?

Information about a private foundation’s assets, finances, leadership, charitable distributions, previous grants, grant recipients, grant purposes, and application procedures can be found in Form 990-PF.

Where can I find grants on Form 990-PF?

Detailed information about grants can be found in Part XIV and related schedules or attachments to the filing. These include grant recipient names, grant amounts, and grant purposes.

How can I determine how much a private foundation gives in grants?

Yes. Form 990-PF includes information about grants and charitable distributions. Examining the detailed list allows you to see individual grants instead of the total amount.

Can Form 990-PF help me determine who has received grants from a private foundation?

Yes. One of the most useful pieces of information on Form 990-PF for grant researchers is grant recipient information which will allow you to find out whether the private foundation has funded organizations similar to yours.

Can Form 990-PF help me understand whether a private foundation accepts applications?

It can. Private foundations can provide information about their application procedures and restrictions. Some private foundations may specify that they fund only preselected organizations and do not accept unsolicited proposals.

How many years of 990-PF filings should I examine?

As much as you can. Looking into several (3-5 years) of annual reports will help you to identify repeated recipients, new organizations, geographical patterns, typical grants amounts and changing funding priorities.

Is a private foundation with a big balance sheet always a better prospect?

Not necessarily. A large asset balance alone does not tell you anything about the foundation’s alignment with your organization. Historical giving, previous recipients, geographical patterns, grant amounts and interests provide much stronger evidence of alignment.

Do private foundations have to distribute 5% of all assets each year?

Not exactly. The minimum distribution calculation for non-operating private foundations is more complex than simply taking 5% of all its assets. It begins with certain non-charitable-use assets and includes various forms of distributions.

What Is Form 990-PF for Nonprofits?

On the surface, Form 990-PF looks like an accounting form.

But to a nonprofit researcher, it can be something much more useful.

You will learn:

Who received the money.

How much they got.

For what purpose they received it.

Where the recipients are located.

Who runs the foundation.

Whether it funds new organizations.

Whether there is sufficient evidence of fit.

So, don’t go through a 990-PF looking for just one magic number.

See the bigger picture.

Look at several years.

Follow the money.

And then ask the key question:

Would our nonprofit fit into the funding pattern of this foundation?

Only then can an information return become a useful grant research tool.

Are You Ready To Conduct Your Foundation Research Faster And Easier?

Grant Advance helps nonprofits to research private foundations, historical grants, grant recipients, giving patterns, grant amounts and potential funder fit.

Get a Free Consultation with Grant Advance Now to see how your organization can build a more efficient foundation prospecting strategy.