The first page of the 990 has a wealth of standard information about the exact legal name, the specific sub-type of nonprofit organization, the year founded and the state it is legally “domiciled” in.
Some other information listed may seem insightful but can actually be misleading depending on the organization’s business model. For example – question #5 “total number of individuals employed in calendar year” should always be taken with a grain of salt. This number includes every person issued a W-2 tax form, including the hourly worker who stayed only three days before taking a different job; the 17 people hired to work two days a week for an eight-week summer program; and the three different people who rotated through the part-time office manager position that year. Thus an organization with only 9 full-time staffers and several year-round part-time workers can legitimately list a total of 36 employees, even though only 13 people attend the weekly staff meeting.
For the same reason, question #6 “total number of volunteers” is often inflated by a single large annual event. Industrious nonprofits count every person who contributes time, even if it is only two hours once a year. The goal is to illustrate another measure of “public support” to possible funders.
Question 7 informs the reader if a form 990-T (T for Taxable income) has also been filed. Sometimes nonprofits generate a small amount of taxable revenue through “Unrelated Business Income” (UBI). This is income unrelated to their nonprofit mission and they must pay tax on this revenue. Line 7a lists the total amount of taxable income, which you can compare to line G at the top “Gross Receipts”. Dividing the total listed in line 7a by the total in line G gives the percent of all revenue considered unrelated to the mission. There is nothing wrong with a nonprofit having UBI revenue; in fact it shows the organization is hustling to bring in more money by capitalizing on opportunities. It only becomes worrisome when the UBI revenue reaches levels high enough to endanger its nonprofit status. (Reference – Form 990, Schedule A, Part I, Question 10).