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Form 990 Preparation Tips

Patricia a. o'malley, cpa.

Read more about Patricia A. O'Malley, CPA

As anyone who has had to compile information for the Form 990 knows, what the IRS is requesting is exceptionally time consuming to put together. If your organization is subject to an audit, you have already devoted a substantial amount of time to prepare for it. And, while a good bit of the information requested during the audit process can be used for the Form 990, there are major areas where the information needed varies between the two activities or additional information is requested.

There are many types of information that can be accumulated throughout the year, lessening the burden later. While the following list is not all inclusive, it provides details for many of the most time-consuming requests:

Financial Information

There are differences between the numbers included in the audited financial statements and the Form 990:

Investment Income

The income generated through investment activity can be summarized for financial statement purposes, but the components need to be broken out for the Form 990.

Unrealized gains and losses are not included in the financial information for the form but are instead included as a reconciling item in the Form 990.
The realized gains are included, along with the cost and the sales proceeds of the investments sold during the year.
Investment expenses are shown in the functional expense statement in the Form 990 but are often netted against income in the financial statements.

Donated Goods and Services

There are limitations to recording the services in the audited financial statements, but all goods and many professional services are included in the revenue and expense accounts. In contrast, none the of the revenue or expenses associated with donated services are included in the Form 990 except as a reconciling item. Having a schedule available showing the break-out the services included in the trial balance accounts is helpful.

The presentation in the Form 990 is more extensive than that shown in the audited financial statements and is complicated. The revenue and expenses are segregated in the revenue section of the Form 990, while the audited financial statements may show this information as a net number. The total revenue is also broken out by contributions and gross receipts (the fair value of the benefits the participants receive). Further, depending on the amount of the revenue collected from special events, more detail for individual events may need to be disclosed. Maintenance of records detailing the activity by event during the year can save time after year-end.

Foreign Transactions

If there is more than $10,000 in expenses related to foreign activities, the amounts will need to be reported by the regions indicated in the Form 990 instructions. These expenses are often not segregated from the accounts throughout the year, leading to a time-consuming task later.

Additional Information:

The need for information relating to the Board is found in several areas of the Form 990.

First, all the voting members of the board who served at any time during the year must be disclosed with their title and a notation for the officers. An estimate of the hours spent weekly on the organization’s business is also needed for each.
Are there any personal or business relationships between board members or with top management? If so, details will be requested.
The number of board members at the end of the year will also be needed.

Related Parties

The definitions differ from those used for the audit when identifying organizations as related parties, so care should be taken when the determination is made. Generally, an organization is related to the filing organization if over 50% of the board members overlap between organizations, or one of the organizations has the right to appoint a majority of the board members of the other organization. A list of the related parties with the EIN, purpose, legal domicile and exemption code will be needed. In some cases, transaction totals by type between the organizations may be required if over $50,000.

Grants Given

The information needed in this area is dependent on whether the award is made to a foreign or US entity and the amount. Grants to organizations located in the US of more than $5,000 require names, addresses, EIN’s, exempt status, purpose and the amount. For all awards made to individuals, the types of awards and the number given by each type will be needed.

Compensation

The compensation for the officers, directors, key employees and highest compensated individuals is shown on the calendar year for Part VII of the Form 990 and on the basis used by the organization for its accounting records in the statement of functional expenses. If the organization has a fiscal year, the calendar year ended within the fiscal year is used for Part VII.

The wages are based upon amounts shown in either the W-2 or Form 1099 for Part VII, but benefit information is also reflected. The amounts received from, or recorded by, related parties are also disclosed in this part.

The wage and benefit amounts in the statement of functional expenses for the officers, directors and key employees are recorded on a line other than those assigned for the other personnel. The totals also need to be broken out by function (program, general and administrative and fundraising).

In some cases, an individual listed in Part VII engages in other activities with the organization that result in payments to the individual. Examples include transactions in which the individual has a stake in an organization providing services to the organization, the child of one of these individuals works for the organization, loans are either given to, or received from, the organization and providing space under a lease. Each type of transaction has a threshold for reporting and will require additional information for disclosure if the requirements for the form are met. You may want to consider consulting with the preparer of the Form 990 to determine whether the transaction(s) are reportable.

A Comprehensive Guide to Form 990 for Nonprofits!

Running a nonprofit means juggling many different objectives and responsibilities– with one of the most crucial being tax compliance with the IRS!

The IRS has established various laws and regulations that provide nonprofits with the benefit of exemption from federal income taxes. Even after obtaining tax-exempt status, however, organizations must still report their financial details, activities, and certain other information to the IRS by filing an annual Form 990 return.

This blog will offer you a quick and comprehensive overview of the steps nonprofits need to take to obtain tax-exempt status, the tax filing requirements they face, and how to ensure ongoing compliance.

Topics covered in this article:

1. How the IRS Classifies Nonprofits 2. Requirements to be Eligible for Tax Exemption 3. Obtaining Tax-Exempt Status 4. Tax Filing Requirements 5. Different Variants of Form 990 6. Deadline to File Form 990 7. What Happens If You Miss the Filing Deadline 8. Extension of Time to File Form 990 9. E-file Mandate 10. Conclusion

How the IRS Classifies Nonprofits

The IRS has established various sections of the Internal Revenue Code (IRC) to grant tax exemption to organizations involved in activities that further exempt purposes, provided they meet the requirements.

Each nonprofit organization will be classified under one of these sections, which is determined by their type of organization, operational methods, and primary purpose.

For example, corporations, funds, and foundations operating for religious, charitable, scientific, literary, or educational purposes are eligible for tax-exempt status under IRC Section 501(c)(3) .

On the other hand, nonprofit organizations promoting social welfare, such as employee associations, qualify for tax exemption under IRC Section 501(c)(4) .

It’s important for each nonprofit to be aware of its IRS classification, as it is vital for understanding the requirements for obtaining and maintaining tax-exempt status.

Requirements to be Eligible for Tax Exemption

The requirements for nonprofits vary depending on the section of the IRC under which they are classified. However, certain criteria apply universally to all nonprofits, regardless of their classification. These requirements are:

No part of the nonprofit’s net earnings should benefit any private shareholder.
Participation in political and lobbying activities is to be limited (and reported using the corresponding forms)
The organization should never be involved in any sort of activity that is against the law.

Upon meeting these fundamental requirements, along with any additional criteria outlined in the corresponding IRC section, your nonprofit organization becomes eligible to apply for tax-exempt status .

Obtaining Tax-Exempt Status

In order to be recognized as exempt by the IRS, you will first need to submit an application. Like the above-mentioned requirements, your application may vary slightly depending on what type of nonprofit organization you run.

Many organizations that are organized and founded for a charitable purpose can apply for tax exempt status by filing Form 1023 – Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. For example, a hospital founded with the purpose of providing emergency healthcare to individuals regardless of whether or not they are able to pay, could apply for exemption using Form 1023.

Other types of organizations that are founded to promote social welfare but are not considered a 501(c)(3) exempt organization can file Form 1024 – Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code. Some examples of types of organizations that can file Form 1024 are Business Leagues, social clubs, and recreational clubs.

Once you determine your nonprofit’s type, you’ll use the corresponding application form. Upon approval, the IRS will issue a determination letter confirming your organization’s tax-exempt status.

It’s important to note that certain exemptions exist. For instance, churches are automatically tax-exempt and do not need to file any application forms.

Tax Filing Requirements for Nonprofits

While obtaining initial tax exemption is a significant milestone for a nonprofit, maintaining exempt status is an ongoing process. This is where IRS Form 990 comes into play!

Form 990 is an annual information return that tax-exempt organizations must file to report specific information required by the IRS. This filing is crucial for maintaining compliance, ensuring transparency, and retaining tax-exempt status. This tax return requires the following information and more:

Revenue, expenses, assets, net liabilities, and other financial information.
Activities carried out by the organization.
Program service accomplishments made during the tax year.
Details about unrelated businesses, transactions, and more.
Compensation details of some of the key members of the organization.

Providing this information to the IRS enables your nonprofit to demonstrate ongoing compliance with established guidelines and regulations.

Different Variants of Form 990

Depending on the type of nonprofit, there are a variety of different 990 Forms that an organization can file. From the information below, you can learn more about your corresponding 990 form.

There are several different types of forms in the IRS 990 Series. The specific form that your organization should file depends on its finances and structure. Here is a description of each:

Form 990-N – Filed by organizations with gross receipts of less than or equal to $50,000.
Form 990-EZ – Filed by organizations with gross receipts of less than $200,000 and total assets less than $500,000.
Form 990 – Filed by organizations with gross receipts greater than or equal to $200,000 (or) total assets greater than or equal to $500,000.
Form 990-PF – Specifically filed by nonprofits classified as ‘Private Foundations’ by the IRS.

In addition to the forms mentioned above, your organization may also be required to file additional forms. If your organization generated income of $1,000 or more from unrelated businesses or trade, you must file Form 990-T in addition to your Form 990/990-EZ.

Based on the information you provided on your 990 Form, you may be required to provide additional information by attaching Schedules –these provide the IRS with additional required information on certain aspects of your organization.

For example, if your organization is classified as a public charity by the IRS, you must include Schedule A to provide substantial details proving your organization’s public support.

Similarly, if your organization has received a contribution of $5,000 or more from any single contributor during the tax year, you must include Schedule B to elaborate on the contribution(s) received.

Deadline to File Form 990

Just like all the other tax filings, the IRS has established a deadline for filing 990 returns as well. 990 returns are generally due on the 15th day of the 5th month after the end of an organization’s accounting period. If this falls on a weekend or a federal holiday, nonprofits should file by the next business day.

Therefore, organizations operating on a calendar tax year will have a deadline of May 15th.

If your nonprofit operates on a fiscal tax year, check out the table below to find your organization’s deadline:

While these deadlines apply to the majority of nonprofits for filing their 990 returns, a few organizations may have slightly different deadlines for submitting their Form 990-T.

For example, Employees’ trusts, defined in section 401(a), IRAs (including SEPs and SIMPLEs), Roth IRAs, Coverdell ESAs, or 408(a) (Archer MSAs), are required to file Form 990-T by the 15th day of the 4th month after the end of the organization’s accounting period.

What Happens If You Miss the Filing Deadline

Failing to file 990 returns can have some nasty consequences–both on your wallet and on the overall status of your organization. In terms of financial consequences, nonprofits that fail to file Form 990 on time are subject to daily penalties, which can range from $20 to $110 per day , depending on the gross receipts of the organization. For smaller organizations, the maximum penalty can be up to $11,000, while for larger organizations, it can reach $56,000 or 5% of the gross receipts.

Note: There is no penalty for late filing of Form 990-N.

Moreover, if a nonprofit fails to file Form 990 for three consecutive years, it risks automatic revocation of its tax-exempt status. This means that the organization will no longer be exempt from paying federal income taxes.

While there is an option to reinstate tax-exempt status by following procedures established by the IRS, it is advisable to avoid such situations by filing 990 returns on time.

Extension of Time to File Form 990

Of course, there may be times when you are unable to prepare and file your nonprofit’s 990 return on time. In such cases, you always have the option to avoid unnecessary penalties by requesting an extension.

Form 8868 is necessary to request an extension of time for filing your nonprofit’s 990 returns. By submitting Form 8868, you can extend the Form 990 filing deadline by up to 6 months.

Moreover, this extension is automatic, eliminating the need for your organization to provide any reason for requesting more time. Utilizing this extension can be incredibly beneficial in avoiding penalties and maintaining your organization’s good standing with the IRS.

IRS E-file Mandate for Nonprofits

With the enactment of the “Taxpayer Act of 2019,” the IRS now mandates that nonprofits file their 990 forms electronically – paper options are no longer available.

What this really means is that you’ll need to find a reliable e-file provider that you can use to facilitate your nonprofit’s 990 filing. When looking for a provider, be sure to confirm that they are an IRS-authorized e-filer and support all the required forms and schedules!

Remember, tax compliance through Form 990 is not only about meeting IRS requirements—it also significantly influences your nonprofit’s reputation and standing among the public.

990 Forms enable your organization to be transparent about how you utilize donations and contributions received throughout the year. This transparency reassures potential donors of the positive impact your organization has, potentially motivating them to become contributing members. The chance to enhance your nonprofit’s public integrity alone makes filing a Form 990 worthwhile!

Now that you have a better understanding of what the 990 Form is and why filing it on time is important, take the time to find the right e-filing service for your organization!

Stephanie Glanville

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Many nonprofit board members and employees come from a for-profit, corporate background. While this may lay the groundwork for reviewing and understanding financial statements and tax returns, nonprofit organizations have unique accounting and reporting nuances that can make the transition more complicated than expected. Of the four primary statements that nonprofits are required to present, two have titles that differ from their for-profit equivalents, and one is even unique to nonprofits.

Statement of Financial Position = Balance Sheet

The Statement of Financial Position includes assets, liabilities, and net assets. There is no requirement for nonprofits to show current assets or current liabilities so typically those are not identified. Rather, assets and liabilities are listed in order of liquidity. Net assets include amounts without donor restrictions and with donor restrictions. These classifications are somewhat self-explanatory in that net assets without donor restrictions means that the entity may use those net assets for any program or administrative costs, and they may be used at any time. Net assets with donor restriction are restricted by the donor to be used only for a specific purpose or during a future period. Net assets with donor restrictions would also include amounts to be held in perpetuity as required by the donor. Any board designated amounts or endowments would be classified as without donor restriction since the board is able to change those designations at any time.

Statement of Activities = Income Statement

The Statement of Activities includes revenues and expenses. It must also show the change in net assets for both net assets without donor restrictions and net assets with donor restrictions along with a total change in net assets. Once donor restricted amounts are used for their required purpose or as time has passed and the restricted amounts become available, a release of restriction is shown in the Statement of Activities as a reduction from net assets with donor restrictions and an increase in net assets without donor restrictions. Because net assets with donor restrictions are not available until released, the Statement of Activities will never show expenses of donor restricted amounts. Instead the amounts show as a release of restriction with the qualifying expenses showing as a change in net assets without donor restrictions. Expenses may be shown by nature or by function or both in the Statement of Activities. Expenses shown by nature present how the money was spent (salaries, rent, professional fees, etc.). Expenses shown by function present whether the money was spent towards program, administrative, or fundraising expenses.

Statement of Functional Expenses

The Statement of Functional Expenses is a unique reporting requirement of nonprofits. If the Statement of Activities does not show expenses by both nature and function as discussed in the previous paragraph, a separate statement showing this breakout is required. Expenses of the Organization must be allocated between program services, general and administrative, and fundraising. General and administrative and fundraising costs are called supporting services. Program services may be broken into multiple programs at the discretion of management or the other users of the financial statements. The allocation is a determination made by management and is an estimate. The allocation may be different for different types of expenses. For example, salaries and benefits expense may be based on estimated time and effort spent in each category, while rent expense may be based on square footage used. There is no one required way to allocate costs, but typically time and effort estimates are the most readily available and can be used to estimate allocations for multiple expenses. There may also be expenses that are direct program, general and administrative, or fundraising expenses and those should be reported as such.

Statement of Cash Flows

The Statement of Cash Flows shows the inflows and outflows of cash throughout the time period reported, and consists of operating, investing, and financing activities. Nonprofit organizations have the unique opportunity to report their Statement of Cash Flows using either the direct or indirect method. The method chosen should be the method that is most user friendly for those reading the financial statements. The direct method reports cash provided by and used for various activities. The indirect method starts with the change in net assets and then reconciles that amount to the cash provided by or used for operating activities.

The statements noted above are required for financial statements presented in accordance with generally accepted accounting principles in the U.S. (GAAP). If your entity presents using cash basis or modified cash basis of accounting this will impact the statements included and how assets and liabilities are reported. The method of accounting, unless GAAP is required by an external reporting requirement (typically a result of loans or grants), should be what is most useful to those reading the financial statements. Those users are typically management and the board and may also include donors, grantors, and other stakeholders. All users of the financial statements should be considered when determining the method of accounting to use.

Management and board members should be reviewing financial statements on a regular basis throughout the year. The timing may be dependent on the activity of the organization, but typically monthly reviews are recommended. The financial statements to be reviewed by management and the board should include comparisons to budget and prior periods when applicable. These internal reports used for management of the organization and fiscal oversight by the board may look different than those that are used for external purposes. Program and development directors should also be reviewing financial statements for their programs or grants on an ongoing basis throughout the year and comparing to budget or other expectations.

IRS Form 990 is the return required for organizations that have been determined to be exempt from income tax. The return is due the 15 th day of the 5 th month following the end of fiscal year. There is an extension of up to 6 months available. For example, if your year end is December 31 st , your Form 990 is due May 15 th and if you file for an extension the return is due November 15 th . If your year-end is June 30 th , your Form 990 is due November 15 th and if you file for an extension the return is due May 15 th .

The specific 990 form to be filed is based on gross receipts. If an organization has an average of less than $50,000 gross receipts each year a 990-N is required. Technically, they may file a 990-EZ or full 990. The 990-N is an electronic form that requires only the EIN, tax year, legal name and address, name of principal officer, website address, and confirmation via checkbox that the annual gross receipts are $50,000 or less. Organizations with gross receipts less than $200,000 and assets less than $500,000 are eligible to file 990-EZ which is an abbreviated version of the full Form 990. If gross receipts or assets are over $200,000 or $500,000, respectively, the full Form 990 must be filed.

Page 1 of Form 990 provides a snapshot of the Organization. This is the first opportunity for the Organization to tell its story to those reading it. As the Form 990 is available for public inspection it is important for the 990 to be used as a marketing tool for the Organization rather than just a required form to be filed each year.

Page 2 of the Form reports on the mission and programs of the Organization for the year. Use this page to tout all of your amazing achievements.

Page 3 and 4 are checklists noting which additional schedules may be required. As a board member it is important to know and understand the additional schedules that may be required to ensure you are meeting your fiduciary responsibility. These schedules are lettered A through R and should be attached if indicated here.

Page 5 includes other IRS compliance considerations and will alert the IRS to other forms that may be required to be filed such as 1099s or W-2s.

Page 6 has information regarding the governance, policies, and disclosures of the Organization. These policies are items that the IRS has deemed important for sound governing practices.

Page 7 lists the Board of Directors, Officers, and certain compensated individuals of the Organization. This list should be all inclusive for anyone that served on the Board or as an Officer at any point in time during the year. Titles should be as of year-end.

Pages 8-11 are the financial information and should agree to the information provided on the statements discussed earlier in this article with a few adjustments for 990 purposes.

Page 12 is supplemental information to the financial statement.

Consideration of Users

When considering how best to report your information either in your financial statements or in your Form 990, first consider who will be reading the information as they may have different nonfinancial objectives that can be displayed via these reports. Donors and grantors want to ensure that the mission is in alignment with their own values and goals. They may evaluate the governance structure and policies and procedures and are also likely interested in the Organization’s program accomplishments and community outreach and results. Board members and prospective board members will also be interested in the mission aligning with their personal values but also from a fiduciary responsibility as well. Board members have a duty to confirm the Organization has the structures and policies in place to comply with all external requirements. The Organization should balance these needs and wants of external parties when considering how best to use the financial statements and Form 990 in telling their unique story.

Kristin Clayton, CPA, Assurance Director, McGowen Hurst Clark Smith, West Des Moines, Iowa

Kristin joined MHCS in June of 2006. Kristin focuses on not-for-profit organizations and trade associations, as well as real estate and attest engagements under the Renewable Fuel Standard. She...

Katie New, CPA, Senior Manager in Business Advisory & Tax Services, McGowen Hurst Clark Smith, West Des Moines, Iowa

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Reporting Officers and Directors on Form 990

Posted on wednesday, may 12, 2021.

The board of directors is the governing body of a nonprofit and ultimately responsible for the o rganization’s activities . This is why it is so important to make sure that you report the proper individuals on your Form 990. If any possible issues arise, the individuals listed in Part VII were providing the oversight during the tax period.

Part VII requires an organization to list its officers, directors, trustee, key employees, and highest compensated employees. The IRS has a specific definition for each of these individuals. It is important to understand the requirements of each classification for correct reporting.

Director or Trustee . Directors or Trustees are all individuals that served on the board at any time during the tax year. These individuals may not be a board member as of the end of the tax year but if they served at any time during the year, they should be listed. Only those individuals with voting rights should be listed. Advisory board members, interns or other individuals that cannot vote, should not be included. It also does not matter if these individuals were paid or not.

Officer . An Officer is an elected or appointed person that manages the organization’s daily operations at any time during the tax year. Officers include board officers (chair, vice chair, secretary, and treasurer), as well as the top management official, normally with the Executive Director or CEO title. Regardless of title, this is the individual responsible for implementing the decisions of the governing board or for supervising the organization’s operations. The top financial official, normally with the CFO title, should also be listed. This is the person having ultimate responsibility for managing the organization’s finances. Depending on the size of the organization, the top management and top financial official may be the same individual.

Key Employee . A key employee is an employee of the organization, not considered an officer, director, or trustee, that satisfies three tests. (1) The employee receives more than $150,000 of reportable compensation from the organization and all related organizations during the tax year or calendar year. (2) The employee must either have responsibilities, powers, or influence over the organization similar to those of an officer, director or trustee; or manage a specific segment or activity of the organization that represents 10% or more of its entire activities, assets, income, or expenses; or have or share authority to control to determine 10% or more of the organization’s capital expenditures, operating budget, or employee compensation. (3) The employee is one of the organization’s 20 employees with the highest reportable compensation for the calendar year ending with or within the organization’s tax year.

Highly Compensated Employees . Employees who receive more than $100,000 of combined reportable compensation (from the organization and related organizations) and who are not current trustees, directors, officers, or key employees of the organization are considered highly compensated employees.

Former . A former Trustee, Director, Officer, or Key Employee is any person (1) the organization reported as such on any of its five prior Form 990s but did not serve in any of those positions at any time during the current tax year and (2) who received in the calendar year ending with or within the organization’s tax year reportable compensation from the organization an any related organization that exceeded $100,000 for a former Officer or Key Employee, or $10,000 for services as Director or Trustee. A former Highly Compensated Employee is an individual (1) that was not an employee during the calendar year ending with or within the organization’s tax year, (2) was reported as one of the five highly compensated employees on any of the organization’s five prior Form 990s, (3) who had reportable compensation that exceeded $100,000 for the calendar year ending with or within the organization’s tax year, and (4) that would be one of the organization’s highly compensated employees based on reportable compensation if they had been an employee during the calendar year ending with or within the organization’s tax year.

An organization may not have individuals to report in all of these categories, especially for smaller organizations or those that are operated entirely by volunteers. However, Indiana nonprofits should report at least a board chair, secretary, and treasurer, which are required by Indiana law.

Contributed by: Carrie Minnich, CPA, MAcct | Director | DWD CPAs & Advisors

Posted in Mission Minded Nonprofits

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

Apr 01, 2019

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IRS Forms 990 as a Research Tool Mark Hager Center on Nonprofits and Philanthropy The Urban Institute. Form 990. Charities with federal charitable exemption must file annually. In 1980s, states began to adopt Form 990 as their required form as well.

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IRS Forms 990 as a Research ToolMark HagerCenter on Nonprofits and PhilanthropyThe Urban Institute

Form 990 • Charities with federal charitable exemption must file annually. • In 1980s, states began to adopt Form 990 as their required form as well. • Public document. Widespread disclosure and legitimacy of form has spurred filing. • More than 200,000 public charities filed Form 990 or Form 990EZ in 2000. • Increasingly used by researchers to document and understand nonprofit organizations and sector.

Not all organizations file • Delinquency. Some organizations fail to file, or file very late. • Small size. No registration if < $5,000 in gross receipts. Not required to file if annual gross receipts < $25,000. • Religious focus. Congregations not required to file. • Entities embedded in larger organizations, or Chapters. • Unincorporated, or sole proprietorships. If all revenues are earned, organizations are not motivated to seek charitable exemption. • Quasi-governmental. Community action agency or mental health clinic, etc., that function as govt agencies.

Research using Form 990 • Studies of scope and dimensions of nonprofit sector, including local inventories. • Subsector analyses. • Spatial analyses. • Benchmarking of financial variables. • Analyses of program services and activities. • Sampling frames for primary data collection.

Overhead Costs Study • Sampling Frame: NCCS Core file of circa 2000 Form 990 filers. • Exclusions: - Gross receipts < $100,000 - Mutual benefit, pension/retirement funds, real estate orgs, named trusts

Data Collection • 5000 organizations drawn • 3782 attempted pre-calls • 3114 successful pre-calls • 3069 surveys FedEx’d • 1540 surveys returned after four months and multiple prompts • 1540 / 3069 = 50.2%

Widespread Questions about Financial Reporting Factoid: Of nonprofit organizations that report at least $5 million in annual contributions, about 1 in 4 report no fundraising costs. Factoid: Of nonprofit organizations that report at least $10 million in annual expenses, about 1 in 25 report no administrative costs.

Research Question How consistent is reporting between IRS Form 990 and an independent survey of nonprofit financials?

Contributions – 53% inconsistency

Government Grants – 32% inconsistency

Special Events – 39% inconsistency

Professional Fundraisers – 10% inconsistency

Joint Cost Allocations – 14% inconsistency

DV: Consistency Across 5 Measures

Functions of Respondents • Development Staff (n=196): - Fundraising director, other fundraising staff • Executive Staff (n=819): - Executive or chief operating officer, president, administrative staff • Accounting Staff (n=160): - Financial officer, accounting director, accounting staff, bookkeeper, tax professional

Do we expect function to matter in consistency of reporting?

Bivariate relationships between function and reporting consistency

Conclusions • Form 990 is a valuable source of data on nonprofit organizations. • Poor reporting on key financials is a big challenge to that value. • Inaccurate reporting has implications for management of individual organizations, public policy research, and giving decisions.

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Gifts-in-kind: Valuation, Presentation and Disclosures

Unpack the accounting and tax concepts surrounding in-kind contributions to ensure that your organization has reported these contributions correctly from both a GAAP and Form 990 reporting perspective.

NASBA Field of Study

Accounting + 1 more

Intermediate

CPE Credits

Susan E. Budak, Brian Yacker

Availability

Product Number

The value of nonfinancial or noncash gifts

Measuring the value of nonfinancial or noncash gifts — commonly referred to as gifts-in-kind (GIK) — that not-for-profits receive presents a unique challenge.

This session of the Not-for-Profit Section’s monthly webcast series explains some of the issues surrounding GIK presentation and disclosure requirements from both a GAAP and Form 990 reporting perspective.

We'll provide answers to common questions regarding:

Whether there is flexibility in presenting or disclosing immaterial items
Which categories are used for disclosure
Whether contributed cryptocurrency is a financial asset or a nonfinancial asset
Whether expenses that are funded by GIKs should be presented separately from other expenses
Whether assets donated for use in raffles/fundraising galas/auctions are within scope
Valuation of hard-to-value noncash items
Financial statement and Form 990 presentation
GAAP and Form 990 disclosures for contributed nonfinancial or noncash assets (gifts-in-kind)

Learning Outcomes

Identify situations requiring in-kind contributions to be reported or not to be reported.
Calculate the value of in-kind contributions.
Distinguish the accounting treatment for in-kind contributions.
Determine the disclosure requirements.
Discuss how noncash contributions are reported on charitable contribution acknowledgements.

Who Will Benefit

Individuals with knowledge of or interest in the not-for-profit industry
Accounting and finance professionals
NFP tax preparers and users of NFP tax returns

Group ordering for your team

2 to 5 registrants

Save time with our group order form. We’ll send a consolidated invoice to keep your learning expenses organized.

6+ registrants

We can help with group discounts. Email [email protected] US customers call 1-800-634-6780 (option 1 )

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Instructions for Schedule A (Form 990) - Introductory Material

Purpose of schedule, who must file, accounting method, lines 1–12 (in general).

Assets test/expenditure test.

Lines 12 and 12a–12d.

Public Support Test.

Noncash contributions.

Loss on uncollectible pledge., support from a governmental unit., unusual grants., unusual grants recordkeeping..

Conservation easements and qualified conservation contributions.

Reporting contributions not reported as revenue.

Lines 4b and 4c.

Lines 7 and 8.

Lines 2 and 3.

Support of governmental entity.

Direct furtherance..

Line 3. Parent of Supported Organizations.

Prior and current year columns.

Definition.

Adjusted basis.

Lines 6 and 7.

Dual-use property.

Excluded property.

Valuation date.

Proration of value of assets held for part of year or in a short tax year.

5-year valuation for real estate.

First tax year.

Emergency temporary reduction.

Approval required.

Lines 8–10.

Attentiveness test.

Responsiveness test., supplemental information required..

Apply the oldest distributions first.

Lines 5 and 6.

Reasonable cause exception.

Judicial proceeding exception., part vi. supplemental information, instructions for schedule a (form 990) (2023), public charity status and public support.

Section references are to the Internal Revenue Code unless otherwise noted.

For the latest information about developments related to Form 990 and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form990 .

General Instructions

Terms in bold are defined in the Glossary of the Instructions for Form 990, Return of Organization Exempt From Income Tax.

Schedule A (Form 990) is used by an organization that files Form 990, Return of Organization Exempt From Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, to provide the required information about public charity status and public support.

An organization that answered “Yes” to Form 990, Part IV, line 1, must complete and attach Schedule A (Form 990) to Form 990. Any section 501(c)(3) organization (or organization treated as such) that files a Form 990-EZ must complete and attach this schedule to Form 990-EZ. These include:

Organizations that are described in section 501(c)(3) and are public charities ;

Organizations that are described in sections 501(e), 501(f), 501(j), 501(k), or 501(n); and

Nonexempt charitable trusts described in section 4947(a)(1) that aren’t treated as private foundations.

If an organization isn’t required to file Form 990 or 990-EZ but chooses to do so, it must file a complete return and provide all of the information requested, including the required schedules.

When completing Schedule A (Form 990), the organization must use the same accounting method it checked on Form 990, Part XII, line 1, or Form 990-EZ, line G. The organization must use this accounting method in reporting all amounts on Schedule A (Form 990), regardless of the accounting method it used in completing Schedule A (Form 990) for prior years, except that in Part V , Sections D and E, distributions must be reported on the cash receipts and disbursements method.

If the accounting method the organization used in completing the 2022 Schedule A (Form 990) was different from the accounting method checked on the 2023 Form 990, Part XII, line 1, or the 2023 Form 990-EZ, line G, the organization shouldn't report in either Part II or Part III the amounts reported in the applicable columns of the 2022 Schedule A (Form 990). Instead, the organization should report all amounts in Part II or Part III using the accounting method checked on the 2023 Form 990, Part XII, line 1, or the 2023 Form 990-EZ, line G.

An organization checks “Cash” on Form 990, Part XII, line 1. It should report the amounts in Part II or Part III using the cash method. If the organization filed a 2022 Schedule A (Form 990) using the cash method, it should report in the 2019 through 2022 columns on the 2023 Schedule A (Form 990) the same amounts that it reported in the 2019 through 2022 columns on the 2022 Schedule A (Form 990).

An organization checks “Accrual” on Form 990, Part XII, line 1. The organization reports grants on Form 990, Part VIII, line 1, in accordance with the Financial Accounting Standards Board FASB ASC 958 (see the instructions for Form 990, Part VIII, line 1). During the year, the organization receives a grant to be paid in future years. The organization should report the grant's present value on the 2023 Schedule A (Form 990). The organization should report accruals of present value increments to the unpaid grant on Schedule A (Form 990) in future years.

Specific Instructions

Part i. reason for public charity status.

Check only one of the boxes on lines 1 through 12 to indicate the reason the organization is a public charity for the tax year . The reason can be the same as stated in the organization's tax-exempt determination letter from the IRS (“exemption letter”) or subsequent IRS determination letter, or it can be different. An organization that doesn't check any of the boxes on lines 1 through 12 shouldn't file Form 990, Form 990-EZ, or Schedule A (Form 990) for the tax year, but should file Form 990-PF instead.

If an organization believes there is more than one reason why it is a public charity, it should check only one box but can explain the other reasons it qualifies for public charity status in Part VI . An organization that claims a public charity status other than section 170(b)(1)(A)(vi) can also demonstrate that it qualifies under section 170(b)(1)(A)(vi) by completing Part II ; it may want to do so for purposes such as qualifying for the first Special Rule in Schedule B (Form 990), Schedule of Contributors, by meeting the 33 1 / 3 % support test.

The IRS doesn't update its records on an organization's public charity status based on a change the organization makes on Schedule A (Form 990). Thus, an organization that checks a public charity status different from the reason stated in its exemption letter or subsequent determination letter, although not required, may submit a request to the IRS Exempt Organizations Determinations Office for a determination letter confirming that it qualifies for the new public charity status if the organization wants the IRS records to reflect that new public charity status (also referred to as “private foundation status”). See the Instructions for Form 8940, Request for Miscellaneous Determination. You must complete and submit Form 8940 with payment of a user fee through Pay.gov . The user fees are listed in Rev. Proc. 2023-5, 2023-1 I.R.B. 265 (updated annually).

A subordinate organization of a group exemption that is filing its own return, but hasn't received its own tax exemption determination letter from the IRS, should check the public charity status box which most accurately describes its public charity status.

An organization that doesn't know the public charity status stated in its exemption letter or subsequent determination letter should call the Exempt Organizations Customer Account Services toll free at 877-829-5500 or write to:

The organization received an exemption letter that it is a public charity under section 170(b)(1)(A)(vi). For the tax year, it meets the requirements for public charity status under section 170(b)(1)(A)(vi). The organization should check the box on line 7 and complete Part II .

The organization received an exemption letter that it is a public charity under section 170(b)(1)(A)(vi). For the tax year, it doesn't meet the requirements for public charity status under section 170(b)(1)(A)(vi). Instead, it meets the requirements for public charity status under section 509(a)(2). The organization should check the box on line 10 and complete Part III .

The organization received an exemption letter that it is a public charity under section 509(a)(2). For the tax year, it doesn't meet the requirements for public charity status under section 509(a)(2) or 170(b)(1)(A)(vi). Instead, it meets the requirements for public charity status as a supporting organization under section 509(a)(3). The organization should:

Check the box for line 12 and either line 12a, 12b, 12c, or 12d;

Complete line 12f;

Complete the table on line 12g; and

Complete Part IV and (if applicable) Part V .

The organization received an exemption letter that it is a supporting organization under section 509(a)(3). Based on Rev. Proc. 2023-5, the organization submitted a Form 8940 request to the IRS to change its classification to public charity status under section 509(a)(2). For the tax year, it meets the requirements of section 509(a)(2). The organization received a determination letter that it has been reclassified as a public charity under section 509(a)(2). The organization should check the box on line 10 and complete Part III .

The organization received an exemption letter that it is a public charity under section 170(b)(1)(A)(vi). For the tax year, it doesn't meet the requirements for public charity status under section 170(b)(1)(A)(vi) or 509(a)(2), or as a supporting organization under section 509(a)(3). Nor does it meet the requirements for public charity status under any other provision of the Internal Revenue Code. The organization is a private foundation and shouldn't file Form 990, Form 990-EZ, or Schedule A (Form 990) for the tax year but should file Form 990-PF instead.

The organization received an exemption letter that it is a supporting organization under section 509(a)(3). The letter doesn't state which type of supporting organization it is. The organization should review the instructions for lines 12a through 12d to determine which type best describes the organization. The organization may wish to file Form 8940 to request a determination of type.

Check the box for a church , convention of churches, or association of churches. Pub. 1828, Tax Guide for Churches and Religious Organizations, lists certain characteristics generally attributed to churches. These attributes of a church have been developed by the IRS and by court decisions. They include: distinct legal existence, recognized creed and form of worship, definite and distinct ecclesiastical government, formal code of doctrine and discipline, distinct religious history, membership not associated with any other church or denomination, organization of ordained ministers, ordained ministers selected after completing prescribed courses of study, literature of its own, established places of worship, regular congregations, regular religious services, Sunday schools for the religious instruction of the young, and schools for the preparation of its ministers. The IRS generally uses a combination of these characteristics, together with other facts and circumstances, to determine whether an organization is considered a church for federal tax purposes.

Check the box for a school whose primary function is the presentation of formal instruction, which regularly has a faculty, a curriculum, an enrolled body of students, and a place where educational activities are regularly conducted. A private school must have a racially nondiscriminatory policy toward its students. For details about these requirements, see Schedule E (Form 990), Schools, and its related instructions.

Check the box for an organization whose main purpose is to provide hospital or medical care. A rehabilitation institution or an outpatient clinic can qualify as a hospital if its principal purposes or functions are the providing of hospital or medical care, but the term doesn't include medical schools, medical research organizations, convalescent homes, homes for children or the aged, or vocational training institutions for handicapped individuals.

Check the box on line 3 also for a cooperative hospital service organization described in section 501(e).

Check the box for an organization whose principal purpose or function is to engage in medical research , and that is directly engaged in the continuous active conduct of medical research in conjunction with a hospital. The hospital must be described in section 501(c)(3) or operated by the federal government, a state or its political subdivision, a U.S. territory or its political subdivision, or the District of Columbia.

If the organization primarily gives funds to other organizations (or grants and scholarships to individuals) for them to do the research, the organization isn't a medical research organization.

The organization isn't required to be an affiliate of the hospital, but there must be a joint effort by the organization and the hospital to maintain continuing close cooperation in the active conduct of medical research.

An organization qualifies as a medical research organization if its principal purpose is medical research, and if it devotes more than half its assets, or spends at least 3.5% of the fair market value of its endowment, directly in conducting medical research . Either test can be met based on a computation period consisting of the immediately preceding tax year or the immediately preceding 4 tax years.

If an organization doesn't satisfy either the assets test or the expenditure test, it can still qualify as a medical research organization based on the circumstances involved.

These tests are discussed in Regulations sections 1.170A-9(d)(2)(v) and (vi). Under these tests, value the organization's assets as of any day in its tax year using the same day every year, and value the endowment at fair market value using commonly accepted valuation methods. See Regulations section 2031.

Check the box and complete Part II if the organization receives and manages property for and expends funds to benefit a college or university that is owned or operated by one or more states or political subdivisions. The school must be an organization described in the instructions for line 2.

Expending funds to benefit a college or university includes acquiring and maintaining the campus, its buildings and equipment, granting scholarships and student loans, and making any other payments in connection with the normal functions of colleges and universities.

The organization must meet the same public support test described later for line 7. See Rev. Rul. 82-132, 1982-2 C.B. 107.

Only a federal, state, or local government or governmental unit that has received an exemption letter recognizing it as exempt from tax under section 501(c)(3) should check this box. See Rev. Rul. 60-384, 1960-2 C.B. 172.

Check the box and complete Part II if the organization meets one of the section 170(b)(1)(A)(vi) public support tests. See the instructions for Part II regarding how an organization can qualify as a publicly supported organization under section 170(b)(1)(A)(vi).

Check the box and complete Part II if the organization is a community trust and meets a section 170(b)(1)(A)(vi) public support test. A community trust is a charity that attracts large contributions for the benefit of a particular community or area, often initially from a small number of donors, and is generally governed by representatives of its particular community or area. See Regulations sections 1.170A-9(f)(10), (11), and (12).

Check the box if the organization is an agricultural research organization described in section 170(b)(1)(A)(ix) operated in conjunction with a land-grant college or university or a non-land grant college of agriculture. Enter the name, city, and state of the college or university. You don't have to complete Part II .

Check the box and complete Part III if the organization meets both of the section 509(a)(2) support tests. See the instructions for Part III regarding how an organization can qualify as a publicly supported organization under section 509(a)(2).

Check the box only if the organization has received a ruling from the IRS that it is organized and operated primarily to test for public safety.

If the organization is a supporting organization , check the box for line 12 and then check the appropriate box for line 12a, 12b, 12c, or 12d to indicate the type of supporting organization it is. The organization must also complete lines 12e and 12f, the table on line 12g, and Part IV . If the organization is a Type III non-functionally integrated supporting organization, it must also complete Part V .

For more information about supporting organizations, see Regulations section 1.509(a)-4 and sections 509(a)(3) and 509(f). For a brief overview of the requirements for qualification as a supporting organization, and the different types of supporting organizations, see Pub. 557, Tax-Exempt Status for Your Organization, and visit IRS.gov/Charities-Non-Profits/Section-509(a)(3)-Supporting-Organizations .

Use the information later to determine the supporting organization's type. If the organization checks the box on line 12e, the letter the organization received from the IRS identifies its type. If the box checked on any of lines 12a through 12d is different from the type stated in the letter (for example, because the organization has made significant changes to its structure or operations resulting in it no longer qualifying as the type of supporting organization indicated in its letter), provide an explanation in Part VI . If the organization doesn't check the box on line 12e, it should check the box on line 12a, 12b, 12c, or 12d that best describes the type of supporting organization it is.

Type I. A Type I supporting organization is operated, supervised, or controlled by one or more publicly supported organizations . If the organization otherwise qualifies as a supporting organization and can answer “Yes” to the following question, check the box for Type I .

Do the supported organizations have a substantial degree of direction over the policies, programs, and activities of the supporting organization, typically by ensuring that the governing body , officers, or membership of the supported organizations may regularly appoint or elect a majority of the supporting organization's directors or trustees?

Type II. A Type II supporting organization is supervised or controlled in connection with one or more publicly supported organizations. If the organization otherwise qualifies as a supporting organization and can answer “Yes” to the following question, check the box for Type II .

Do the same persons, such as directors, trustees, and officers, supervise or control the supported organization(s) and the supporting organization?

Type III—Functionally integrated. Check this box if the organization qualifies as a Type III functionally integrated supporting organization by meeting the following requirements.

The organization meets the notification requirement described in Part IV, Section D, line 1;

The organization meets the responsiveness test (both the relationship requirement and the significant voice requirement) described in Part IV, Section D, lines 2 and 3; and

The organization meets one of the alternative integral part tests described in Part IV, Section E.

Type III—Non-functionally integrated. Check this box if the organization qualifies as a Type III non-functionally integrated supporting organization by meeting the following requirements.

The organization meets the integral part test by meeting either (a) the distribution and attentiveness requirements described in Part V , or (b) the alternative integral part test for certain trusts in existence on November 20, 1970, described in Part V, line 1.

The organization's exemption letter or subsequent determination letter may state the type of supporting organization it is. If it does, check the box on this line. If the letter doesn't state the type, or if the letter states Type III but doesn't specify whether functionally integrated or non-functionally integrated, leave this line blank.

A grantor to a section 509(a)(3) supporting organization, acting in good faith, can rely on this letter in determining whether the organization is a Type I , Type II , Type III functionally integrated , or Type III non-functionally integrated supporting organization until the IRS makes a public announcement of the entity’s change in status. See Rev. Proc. 2018-32, 2018-23 I.R.B. 739.

A supporting organization must be organized and operated exclusively to support or benefit one or more specified publicly supported organizations. Please write in the space provided the number of supported organizations. Include all supported organizations that the organization was organized to support at any time during the tax year, whether or not they actually received support during the tax year.

An organization checking a box on line 12a, 12b, 12c, or 12d must complete the table on line 12g.

Columns (i) and (ii). Enter the name and employer identification number ( EIN ) for each supported organization counted on line 12f. If the organization had more than five supported organizations during the tax year, enter the additional organizations on duplicate pages of Schedule A (Form 990), Part I . Use as many duplicate copies as needed, and number each page.

Column (iii). For each supported organization named in column (i), enter the line number (from lines 1 through 10 above) that best describes the foundation status of the supported organization.

If the supported organization is a hospital, then that is an organization described in section 170(b)(1)(A)(iii), and you should enter “3” in column (iii).

If the supported organization is a federal, state, or local governmental unit, or foreign government, then that is an organization described in section 170(b)(1)(A)(v), and you should enter “6” in column (iii).

If the supported organization is exempt under section 501(c)(4), 501(c)(5), or 501(c)(6), but can be supported by a supporting organization (see Regulations section 1.509(a)-4(k)), enter the line number (from lines 1 through 10 above) that would describe the section 501(c)(4), 501(c)(5), or 501(c)(6) organization if it were a section 501(c)(3) organization. Identify the specific code section (501(c)(4), 501(c)(5), or 501(c)(6)) for each such supported organization in Part VI.

Column (iv). Check “Yes” if the supported organization named in column (i) is specifically named as a supported organization in the organization's declaration of trust, articles of incorporation, or other governing document. If the supported organization is not named in the organizing documents, check “No” and explain why in Part VI .

Column (v). Enter the total amount of monetary support paid to, or for the benefit of, the supported organization named in column (i) during the tax year . Such monetary support may include making payments to or for the use of individual members of the charitable class benefited by the supported organization (such as scholarships), and to 501(c)(3) public charities operated, supervised, or controlled directly by or in connection with the supported organization. See Regulations section 1.509(a)-4(e). If no monetary support was provided during the tax year, enter “0”.

Column (vi). In this column, the organization may (but isn't required to) provide an estimate of the fair market value of goods, other property, services, and use of facilities that is provided to or for the benefit of the supported organizations during the tax year. Describe in Part VI any such goods, other property, services, and use of facilities, whether or not an amount is reported for them in column (vi).

Part II. Support Schedule for Organizations Described in Sections 170(b)(1)(A)(iv) and 170(b)(1)(A)(vi)

For an organization to qualify as a publicly supported organization under section 170(b)(1)(A)(vi), either:

33 1 / 3 % or more of its total support must come from governmental units, contributions from the general public, and contributions or grants from other public charities; or

10% or more of its total support must come from governmental units, contributions from the general public, and contributions or grants from other public charities and the facts and circumstances indicate it is a publicly supported organization.

An organization won't meet either of these public support tests if almost all of its support comes from gross receipts from related activities and an insignificant amount of its support comes from governmental units and contributions made directly or indirectly by the general public.

Public support is measured using a 5-year computation period that includes the current and 4 prior tax years (including short years). If the organization's current tax year or any of its 4 prior tax years were short years, explain in Part VI .

If the organization wasn't a section 501(c)(3) organization for the entire 5-year period in Part II , report amounts only for the years the organization was a section 501(c)(3) organization.

Don't include any “unusual grants.” See Unusual grants , later. Include membership fees only to the extent to which the fees are payments to provide support for the organization rather than to purchase admissions, merchandise, services, or the use of facilities. To the extent that the membership fees are payments to purchase admissions, merchandise, services, or the use of facilities in a related activity, report the membership fees on line 12. To the extent that the membership fees are payments to purchase admissions, merchandise, services, or the use of facilities in an unrelated business activity, report the membership fees on line 9. See Regulations section 1.170A-9(f)(7)(iv). Include qualified sponsorship payments under section 513(i).

Use any reasonable method to determine the value of noncash contributions reported on line 1.

Don't report any donations of services (such as the value of donated advertising space or broadcast air time) or donations of use of materials, equipment, or facilities, on line 1 as gifts, grants, or contributions. Donated services and facilities from a governmental unit only are reported on line 3.

If an organization records a loss on an uncollectible pledge that it reported on a prior year's Schedule A (Form 990), it should deduct that loss from the contribution amount for the year in which it originally counted that contribution as revenue. For example, if in the prior tax year the organization reported a pledged contribution with a then-present value of $50,000 in Part II, line 1, column (e), but learned during the current tax year that it wouldn't receive any of that pledged contribution, it should deduct the $50,000 from the amount reported in Part II, line 1, column (d), for the prior tax year.

Include on line 1 support received from a governmental unit . This includes contributions , but not gross receipts from exercising or performing the organization's tax-exempt purpose or function, which should be reported on line 12. An amount received from a governmental unit is treated as gross receipts from exercising or performing the organization's tax-exempt purpose or function if the purpose of the payment is primarily to serve the direct and immediate needs of the payor governmental unit, and is treated as a contribution, if the purpose is primarily to provide a direct benefit to the public. For example, a payment to maintain library facilities that are open to the public should be treated as a contribution. See Regulations section 1.170A-9(f)(8) and Rev. Rul. 81-276, 1981-2 C.B. 128. Refer to the instructions for Form 990, Part VIII, lines 1e and 2, for more examples addressing the distinction between government payments that are contributions and government payments that are gross receipts from activities related to the organization's tax-exempt purpose or function. Medicare and Medicaid payments are treated as gross receipts from patients rather than as contributions from the government payor for purposes of the public support test. See Rev. Rul. 83-153, 1983-2 C.B. 48.

Unusual grants are generally substantial contributions and bequests from disinterested persons and are:

Attracted because of the organization's publicly supported nature,

Unusual and unexpected because of the amount, and

Large enough to endanger the organization's status as normally meeting either the 33 1 / 3 % public support test or the 10%-facts-and-circumstances test.

For a list of other factors to be considered in determining whether a grant is an unusual grant, see Regulations section 1.509(a)-3(c)(4).

An unusual grant is excluded even if the organization receives or accrues the funds over a period of years.

Don't report gross investment income items as unusual grants. Instead, include all investment income on line 8.

See Rev. Rul. 76-440, 1976-2 C.B. 58; Regulations section 1.170A-9(f)(6)(ii); and Regulations sections 1.509(a)-3(c)(3) and (4) for details about unusual grants.

Include in Part VI a list showing the amount, but not the grantor, of each unusual grant actually received each year (if the cash accounting method is used) or accrued each year (if the accrual accounting method is used).

An organization that received any unusual grants during the 5-year period should also keep for its records a list showing, for each year, the name of the contributor, the date and amount of the grant, and a brief description of the grant. If the organization used the cash method for the applicable year, show only the amounts the organization actually received during that year. If the organization used the accrual method for the applicable year, show only the amounts the organization accrued for that year. An example of this list is given below.

Line 1. Example—List of unusual grants

The organization must report any qualified conservation contributions and contributions of conservation easements consistently with how it reports revenue from such contributions in its books, records, and financial statements and in Form 990, Part VIII, Statement of Revenue .

If the organization reports any contributions on line 1 of Schedule A (Form 990), Part I, that it doesn't report on Form 990 as revenue in Part VIII or as assets in Part X, or as revenue or assets on Form 990-EZ, explain in Part VI the basis for characterizing such transfers as contributions but not as revenue or assets. For example, if an organization is a community foundation that receives and holds a cash transfer for another tax-exempt organization and reports contributions of such property on Schedule A (Form 990), Part II, line 1, without reporting it on Form 990 as revenue in Part VIII or assets in Part X, explain the basis for characterizing the property as contributions but not as revenue or assets.

Enter tax revenue levied for the organization's benefit by a governmental unit and either paid to the organization or expended on its behalf. Report this amount whether or not the organization includes this amount as revenue on its financial statements or elsewhere on Form 990 or 990-EZ.

Enter the value of services or facilities furnished by a governmental unit to the organization without charge. Don't include the value of services or facilities generally furnished to the public without charge. For example, include the fair rental value of office space furnished by a governmental unit to the organization without charge but only if the governmental unit doesn't generally furnish similar office space to the public without charge. Report these amounts whether or not the organization includes these amounts as revenue on its financial statements or elsewhere on Form 990 or 990-EZ.

Enter in column (f) the portion of total contributions by each individual, trust, or corporation included on line 1 for the years reported that exceeds 2% of the amount reported in line 11, column (f). In applying the 2% limitation, all contributions made by a donor and by any person or persons standing in a relationship to the donor that is described in sections 4946(a)(1)(C) through (a)(1)(G) and the related regulations (for example, spouses and certain other family members, and entities where ownership or control interests exceed a threshold level) will be treated as made by one person. However, the 2% limitation doesn't apply to contributions from organizations qualifying as publicly supported organizations under section 170(b)(1)(A)(vi), governmental units described in section 170(b)(1)(A)(v), and other organizations, such as the following, but only if they also qualify as publicly supported organizations under section 170(b)(1)(A)(vi).

Churches described in section 170(b)(1)(A)(i),

Educational institutions described in section 170(b)(1)(A)(ii),

Hospitals described in section 170(b)(1)(A)(iii),

Organizations operated for the benefit of a college or university owned or operated by a governmental unit described in section 170(b)(1)(A)(iv), and

Agricultural research organizations described in section 170(b)(1)(A)(ix).

The organization should keep for its records a list showing the name of and amount contributed by each donor (other than a governmental unit or publicly supported organization) whose total gifts during the years reported exceed 2% of the amount reported in line 11, column (f). An example of this list is given later.

Line 5. Example—List of donors other than governmental units and publicly supported organizations

Include the gross income from interest, dividends, payments with respect to securities loans (section 512(a)(5)), rents, royalties, and income from similar sources. Don't include on this line payments that result from activities of the organization that further its exempt purpose. Instead, report these amounts on line 12.

Enter the organization's net income from conducting unrelated business activities, whether or not the activities are regularly conducted as a trade or business. See sections 512 and 513 and the applicable regulations. Include membership fees to the extent they are payments to purchase admissions, merchandise, services, or the use of facilities in an activity that is an unrelated business.

When calculating unrelated business taxable income (UBTI) for this purpose, an exempt organization with more than one unrelated trade or business may use either its UBTI calculated under section 512(a)(6) or its UBTI calculated in the aggregate. If a net loss results, enter “0” on this line.

Include all support as defined in section 509(d) that isn't included elsewhere in Part II . Explain in Part VI the nature and source of each amount reported. Don't include gain or loss from amounts reportable on line 12 or from the sale of capital assets.

Enter the total amount of gross receipts the organization received from related activities for all years reported in Part II . The organization won't be treated as meeting the section 170(b)(1)(A)(vi), 33 1 / 3 % public support test or the 10%-facts-and-circumstances public support test, if almost all of its support consists of gross receipts from related activities and an insignificant amount of its support comes from governmental units and public contributions . See Regulations section 1.170A-9(f)(7)(iii).

Include on line 12 gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities in any activity which isn't an unrelated trade or business (within the meaning of section 513). See section 509(d)(2). Include membership fees to the extent they are payments to purchase admissions, merchandise, services, or the use of facilities in a related activity. For example, include on this line gross receipts from:

A trade or business in which substantially all work is performed by volunteers (such as book fairs and sales of gift wrap paper). See section 513(a)(1).

A trade or business carried on by the organization primarily for the convenience of its members, students, patients, officers , or employees . See section 513(a)(2).

A trade or business which is the selling of merchandise, substantially all of which the organization received as gifts or contributions . See section 513(a)(3).

“Qualified public entertainment activities” or “qualified convention and trade show activities” of certain organizations. See section 513(d).

Furnishing certain hospital services. See section 513(e).

A trade or business consisting of conducting bingo games, but only if the conduct of such games is lawful. See section 513(f).

Qualified pole rentals by a mutual or cooperative telephone or electric company. See section 513(g).

The distribution of certain low-cost articles incidental to the solicitation of charitable contributions (except to the extent such gross receipts are properly treated as charitable contributions reportable on line 1 rather than as proceeds of a sale or exchange), and exchange and rental of members lists. See section 513(h).

An organization that checks this box should stop here and shouldn't complete the rest of Part II . It shouldn't make a public support computation on line 14 or 15 or check any of the boxes on lines 16 through 18.

An organization receives an exemption letter from the IRS that it is exempt from tax under section 501(c)(3) and qualifies as a public charity under section 170(b)(1)(A)(vi) effective on its date of incorporation. When the organization prepares Part II for each of its first 5 tax years as a section 501(c)(3) organization, it should check the box on line 13 and shouldn't complete the rest of Part II . When the organization prepares Part II for its sixth tax year and subsequent years, it shouldn't check the box on line 13 and should complete the rest of Part II .

Round to the nearest hundredth decimal point in reporting the percentage of public support. For example, if the organization calculates its public support percentage as 58.3456%, this percentage would be rounded to 58.35% when reported on line 14.

For 2023, enter the public support percentage from the 2022 Schedule A (Form 990), Part II, line 14. Round to the nearest hundredth decimal point in reporting the percentage of public support.

If the organization didn't check the box on line 13, and line 14 is 33 1 / 3 % or more, check the box on this line and don't complete the rest of Part II . The organization qualifies as a publicly supported organization for 2023 and 2024.

If the organization didn't check a box on line 13 or 16a, and line 15 is 33 1 / 3 % or more, check the box on this line and don't complete the rest of Part II . The organization qualifies as a publicly supported organization for 2023.

If the organization didn't check a box on line 13, 16a, or 16b, and line 14 is 10% or more, and if the organization meets the facts-and-circumstances test, check the box on this line and don't complete the rest of Part II . The organization qualifies as a publicly supported organization for 2023 and 2024.

If this box is checked, explain in Part VI how the organization meets the facts-and-circumstances test in Regulations section 1.170A-9(f)(3). Include the following information.

Explain whether the organization maintains a continuous and bona fide program for solicitation of funds from the general public, community, membership group involved, governmental units , or other public charities .

List all other facts and circumstances, including the sources of support, whether the organization has a governing body that represents the broad interests of the public, and whether the organization generally provides facilities or services directly for the benefit of the general public on a continuing basis.

If the organization is a membership organization, explain whether the solicitation for dues-paying members is designed to enroll a substantial number of persons from the community, whether dues for individual members have been fixed at rates designed to make membership available to a broad cross-section of the interested public, and whether the activities of the organization will likely appeal to persons having some broad common interest or purpose.

If the organization didn't check a box on line 13, 16a, 16b, or 17a, and line 15 is 10% or more, and if the organization meets the facts-and-circumstances test, check the box on this line and don't complete the rest of Part II . The organization qualifies as a publicly supported organization for 2023. If this box is checked, explain in Part VI how the organization meets the facts-and-circumstances test in Regulations section 1.170A-9(f)(3). Include the same information identified in the instructions for Line 17a , earlier.

If the organization didn't check a box on line 13, 16a, 16b, 17a, or 17b, it doesn't qualify as a publicly supported organization under section 170(b)(1)(A)(iv) or 170(b)(1)(A)(vi) for the 2023 tax year and should check the box on this line. If the organization doesn't qualify as a public charity under any of the boxes in Part I, lines 1 through 12, it is a private foundation as of the beginning of the 2023 tax year for filing purposes and shouldn't file Form 990, Form 990-EZ, or Schedule A (Form 990) for the 2023 tax year. Instead, the organization should file Form 990-PF and check Initial return of a former public charity on Form 990-PF, at the top of page 1.

Part III. Support Schedule for Organizations Described in Section 509(a)(2)

For an organization to qualify as a publicly supported organization under section 509(a)(2):

More than 33 1 / 3 % of its support normally must come from gifts, grants, contributions , membership fees, and gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities in an activity which isn't an unrelated trade or business under section 513; and

No more than 33 1 / 3 % of its support normally must come from gross investment income and net unrelated business income (less section 511 tax) from businesses acquired by the organization after June 30, 1975.

In Part III , if the organization wasn't a section 501(c)(3) organization for the entire 5-year period, report amounts only for the years the organization was a section 501(c)(3) organization.

Don't include any “unusual grants.” See Unusual grants , later. Include membership fees only to the extent to which the fees are payments to provide support for the organization rather than to purchase admissions, merchandise, services, or the use of facilities. To the extent that the membership fees are payments to purchase admissions, merchandise, services, or the use of facilities in a related activity, include the membership fees on line 2. See Regulations section 1.509(a)-3(h). To the extent that the membership fees are payments to purchase admissions, merchandise, services, or the use of facilities in an activity that isn't an unrelated business under section 513, report the membership fees on line 3. To the extent that the membership fees are payments to purchase admissions, merchandise, services, or the use of facilities in an activity that is an unrelated business, report the net amount either on line 10b or 11, as appropriate.

Don't report any donations of services (such as the value of donated advertising space or broadcast air time) or donations of use of materials, equipment, or facilities on line 1 as gifts, grants, or contributions. Donated services and facilities from a governmental unit are reported on line 5.

If an organization records a loss on an uncollectible pledge that it reported on a prior year's Schedule A (Form 990), it should deduct that loss from the contribution amount for the year in which it originally counted that contribution as revenue. For example, if in the prior tax year the organization reported a pledged contribution with a then-present value of $50,000 in Part III, line 1, column (e), but learned during the current tax year that it wouldn't receive any of that pledged contribution, it should deduct the $50,000 from the amount reported in Part III, line 1, column (d), for the prior tax year.

Include on line 1 support received from a governmental unit . This includes contributions , but not gross receipts from exercising or performing the organization's tax-exempt purpose or function, which should be reported on line 2. Contributions are sometimes difficult to distinguish from such gross receipts—the label on the agreement isn't controlling. An amount received from a governmental unit is treated as gross receipts from exercising or performing the organization's tax-exempt purpose or function if the purpose of the payment is primarily to serve the direct and immediate needs of the payor governmental unit. An amount is treated as a contribution if the purpose of the payment is primarily to provide a direct benefit to the public. For example, if a state government agency pays an organization to operate an institute to train agency employees in the principles of management and administration, the funds received should be included on line 2 as gross receipts. See Regulations section 1.509(a)-3(g). Refer to the instructions for Form 990, Part VIII, lines 1e and 2, for more examples addressing the distinction between government payments that are contributions and government payments that are gross receipts from activities related to the organization's tax-exempt purpose or function. Medicare and Medicaid payments are treated as gross receipts from patients rather than as contributions from the government payor for purposes of the public support test. See Rev. Rul. 83-153, 1983-2 C.B. 48.

Large enough to endanger the organization's status as normally meeting the 33 1 / 3 % public support test.

Don't report gross investment income items as unusual grants. Instead, include all investment income on line 10a.

An organization that received any unusual grants during the 5-year period, should also keep for its records a list showing, for each year, the name of the contributor, the date and amount of the grant, and a brief description of the grant. If the organization used the cash method for the applicable year, show only amounts the organization actually received during that year. If the organization used the accrual method for the applicable year, show only amounts the organization accrued for that year. An example of this list is given below.

If the organization reports any contributions on Schedule A (Form 990), Part III, line 1, that it doesn't report on Form 990, as revenue in Part VIII or as assets in Part X, or as revenue or assets on Form 990-EZ, explain in Part VI the basis for characterizing such transfers as contributions but not as revenue or assets. For example, if an organization is a community foundation that receives and holds a cash transfer for another tax-exempt organization and reports contributions of such property on Schedule A (Form 990), Part III, line 1, without reporting it on Form 990, as revenue in Part VIII or assets in Part X, explain the basis for characterizing the property as contributions but not as revenue or assets.

Include gross receipts from admissions, merchandise sold, services performed, or facilities furnished in any activity that is related to the organization's tax-exempt purpose (such as charitable, educational, etc.).

To the extent that membership fees are payments to purchase admissions, merchandise, services, or the use of facilities in a related activity, include the membership fees on this line 2. See Regulations section 1.509(a)-3(h).

Include gross receipts from activities that aren't an unrelated trade or business under section 513, such as:

A trade or business that is the selling of merchandise, substantially all of which the organization received as gifts or contributions . See section 513(a)(3).

While the activity of soliciting and receiving qualified sponsorship payments is also excluded from unrelated business (see section 513(i)), the qualified sponsorship payments themselves are treated as charitable contributions reportable on line 1.

Enter the value of services or facilities furnished by a governmental unit to the organization without charge. Don't include the value of services or facilities generally furnished to the public without charge. For example, include the fair rental value of office space furnished by a governmental unit to the organization without charge, but only if the governmental unit doesn't generally furnish similar office space to the public without charge. Report these amounts whether or not the organization includes these amounts as revenue on its financial statements or elsewhere on Form 990 or 990-EZ.

Enter the amounts that are included on lines 1, 2, and 3 that the organization received from disqualified persons. See the definition of disqualified person in the Glossary of the Instructions for Form 990.

For amounts included on lines 1, 2, and 3 that were received from a disqualified person, the organization should keep for its records a list showing the name of, and total amounts received in each year from, each disqualified person. Enter the total of such amounts for each year on line 7a. See an example of this list above.

Line 7a. Example—List of amounts received from disqualified persons

For any gross receipts included on lines 2 and 3 from related activities received from a person or from a bureau or similar agency of a governmental unit , other than from a disqualified person , that exceed the greater of $5,000 or 1% of the amount on line 13 for the applicable year, enter the excess on line 7b. The organization should keep for its records a list showing, for each year, the name of the person or government agency, the amount received during the applicable year, the larger of $5,000 or 1% of the amount on line 13 for the applicable year, and the excess, if any. See an example of this list above.

Line 7b. Example—List of amounts received from other than disqualified persons Year 2023

Include the gross income from interest, dividends, payments received on securities loans (section 512(a)(5)), rents, royalties, and income from similar sources. Don't include on this line payments that result from activities of the organization that further its exempt purpose. Instead, report these amounts on line 2.

Enter the excess of the organization's unrelated business taxable income (UBTI) (as defined in section 512) from trades or businesses that it acquired or commenced after June 30, 1975, over the amount of tax imposed on this income under section 511. Include membership fees to the extent they are payments to purchase admissions, merchandise, services, or the use of facilities in an unrelated business activity that is a trade or business that was acquired or commenced after June 30, 1975.

When calculating UBTI for this purpose, an exempt organization with more than one unrelated trade or business may use either its UBTI calculated under section 512(a)(6) or its UBTI calculated in the aggregate.

Enter the organization's net income from conducting unrelated business activities not included on line 10b, whether or not the activities are regularly conducted as a trade or business. Don't include net income from conducting trades or businesses acquired or commenced by the organization prior to July 1, 1975. See sections 512, 513, and 514, and the applicable regulations. Include membership fees to the extent they are payments to purchase admissions, merchandise, services, or the use of facilities in an activity that is an unrelated business not included on line 10b.

Include all support as defined in section 509(d) that isn't included elsewhere in Part III . Explain in Part VI the nature and source of each amount reported. Don't include gain or loss from the sale of capital assets.

An organization that checks this box should stop here and shouldn't complete the rest of Part III . It shouldn't make a public support computation on line 15 or 16 or an investment income computation on line 17 or 18, or check any of the boxes for line 19 or 20.

An organization receives an exemption letter from the IRS that it is exempt from tax under section 501(c)(3) and qualifies as a public charity under section 509(a)(2) effective on its date of incorporation. When the organization prepares Part III for its first 5 tax years, it should check the box on line 14 and shouldn't complete the rest of Part III . When the organization prepares Part III for its sixth tax year and subsequent years, it shouldn't check the box on line 14 and should complete the rest of Part III .

For 2023, enter the public support percentage from 2022 Schedule A (Form 990), Part III, line 15. Round to the nearest hundredth decimal point in reporting the percentage of public support.

Round to the nearest whole percentage.

For 2023, enter the investment income percentage from the 2022 Schedule A (Form 990), Part III, line 17. Round to the nearest whole percentage.

If the organization didn't check the box on line 14, line 15 is more than 33 1 / 3 %, and line 17 isn't more than 33 1 / 3 %, check the box on this line and don't complete the rest of this schedule . The organization qualifies as a publicly supported organization for 2023 and 2024.

If the organization didn't check the box on line 14 or 19a, line 16 is more than 33 1 / 3 %, and line 18 isn't more than 33 1 / 3 %, check the box on this line and don't complete the rest of this schedule . The organization qualifies as a publicly supported organization for 2023.

If the organization didn't check the box on line 14, 19a, or 19b, it doesn't qualify as a publicly supported organization under section 509(a)(2) for the 2023 tax year and should check the box on this line. If the organization doesn't qualify as a public charity under any of the boxes on Schedule A (Form 990), Part I, lines 1 through 12, it is a private foundation for filing purposes as of the beginning of the tax year and shouldn't file Form 990, Form 990-EZ, or Schedule A (Form 990) for the 2023 tax year. Instead, the organization should file Form 990-PF, and check Initial return of a former public charity on Form 990-PF, at the top of page 1.

Part IV. Supporting Organizations

Complete the sections of Part IV that correspond below with the type of supporting organization indicated on line 12a, 12b, 12c, or 12d of Part I .

Type I: Sections A and B;

Type II: Sections A and C;

Type III Functionally Integrated: Sections A, D, and E; and

Type III Non-Functionally Integrated: Sections A and D, and Part V .

Section A. All Supporting Organizations

The organization's articles of incorporation or trust instrument must designate the publicly supported organization(s) on whose behalf the supporting organization is operated. The articles of a Type I or Type II supporting organization may designate its supported organization(s) either by class or purpose or by name. The articles of a Type III supporting organization must designate the supported organization(s) by name, unless a historic and continuing relationship exists between the organizations.

Check “Yes” only if the organization supports no organization other than those listed by name in its governing instrument. If the organization supports any organization not specifically listed, check “No” and describe in Part VI how the supported organizations are designated. If designated by class or purpose, describe the class or purpose. If the organization and its supported organization(s) have a historic and continuing relationship, explain that relationship. If support of one or more organizations is subject to certain future contingencies, explain those contingencies, and explain what organizations will be supported or benefited if those contingencies occur.

If the organization supported any domestic or foreign organization (other than an organization described in section 501(c)(4), (5), or (6)) that didn't have an IRS determination of status under section 509(a)(1) or (2), check “Yes” and explain in Part VI how the organization determined that the supported organization was described in section 509(a)(1) or (2) and why the supported organization doesn't have such an IRS determination (for example, because it has applied for but not yet received such a determination, or it isn't required to obtain recognition of its public charity status because it is a church, a state university, or described in section 4948(b)).

A supporting organization may support an organization described in section 501(c)(4), (5), or (6), if the supported organization satisfies the public support tests applicable to a section 509(a)(2) organization. See Regulations section 1.509(a)-4(k) and the instructions for Part III. If the organization supports a section 501(c)(4), (5), or (6) organization, check “Yes” for line 3a.

If the organization confirmed that the supported organization qualified under section 501(c)(4), (5), or (6) and met the section 509(a)(2) public support test for its most recent tax year, check “Yes” and describe in Part VI how the organization made this determination. For example, the organization may ask its section 501(c)(4), (5), or (6) supported organization to furnish a copy of its IRS determination letter and to complete annually a pro forma Schedule A (Form 990), Part III , and keep the letter and support calculation in the supporting organization’s files.

If the supporting organization doesn't annually confirm that its supported organization satisfies the section 509(a)(2) public support test, it must explain in Part VI how it knows that the supported organization would’ve been described in section 509(a)(2) if it were described in section 501(c)(3) during the tax year.

Support given to a supported section 501(c)(4), (5), or (6) organization must be used solely for charitable purposes. If the supporting organization has put into place measures to ensure that such support is used solely for charitable purposes, check “Yes” and describe those measures in Part VI . If not, check “No” and describe in Part VI how the supporting organization ensured during the tax year that its assets were used solely for charitable purposes.

A supporting organization can't qualify for Type III status in the tax year if any supported organization wasn't organized in the United States.

A supporting organization must exercise control and discretion over funds granted to an organization that isn't exempt under section 501(c)(3). See Rev. Rul. 68-489, 1968-2 C.B. 210. Also, a domestic charity must generally exercise control and discretion over funds granted to a foreign organization. See Rev. Rul. 63-252, 1963-2 C.B. 101, and Rev. Rul. 66-79, 1966-1 C.B. 48.

Explain in Part VI how the organization retained such control and discretion despite being controlled or supervised by or in connection with such foreign supported organization(s). Also, explain what controls the organization used to ensure that all support to the foreign supported organization(s) was used exclusively for charitable, educational, etc., purposes described in section 170(c)(2)(B) if the foreign supported organization doesn't have an IRS determination under sections 501(c)(3) and 509(a)(1) or (2).

Supporting organizations may add, substitute, or remove supported organizations only in certain limited situations. See Regulations section 1.509(a)-4(d). Generally, a Type I or Type II supporting organization may add or substitute particular supported organizations within the class or classes designated in its articles, but may not add or substitute supported organizations outside of the designated class(es). A Type III supporting organization, which must specify its supported organizations by name, may only substitute supported organizations if such substitution is conditioned upon the occurrence of an event that is beyond the control of the supporting organization (such as a supported organization’s lapse into private foundation status).

If the organization has added, substituted, or removed any supported organization during the tax year, check “Yes” and provide detail in Part VI , including (i) the names and EINs of the organizations added, substituted, or removed; (ii) the reasons for each addition, substitution, or removal; (iii) the authority under the organization’s organizing document for each addition, substitution, or removal; and (iv) an explanation of how the action was accomplished (such as by amendment to the organizing document substituting a new supported organization).

A supporting organization must engage solely in activities that support or benefit its supported organization(s). In addition to making grants and providing services and facilities directly to its supported organization(s), a supporting organization may also generally make grants or provide services or facilities to (1) individual members of the charitable class benefited by its supported organization(s), or (2) other supporting organizations that also support or benefit its supported organization(s). See Regulations section 1.509(a)-4(e). If the organization made any grants or provided any benefits to any other organization or individual, check “Yes” and provide detail in Part VI .

Under section 4958(c)(3), any grant, loan, compensation, or other similar payment provided by a supporting organization to a substantial contributor (defined in section 4958(c)(3)(C)), to a family member (defined in section 4958(f)(4)), and to a 35% controlled entity of such persons, is considered a per se excess benefit in its entirety, regardless of the fairness or reasonableness of the payment, and is subject to tax under section 4958(a). The same is true of any loan by a supporting organization to a disqualified person under section 4958 (other than loans to certain exempt organizations). If the organization made any such payment or loan during the tax year, check “Yes” and report the transaction on Schedule L (Form 990), Transactions With Interested Persons, Part I. For more information on excess benefit transactions generally, see the Instructions for Schedule L (Form 990).

A supporting organization may not be controlled by disqualified persons , as defined in section 4946. Section 509(a)(1) or (2) organizations, and foundation managers who are disqualified persons only as a result of being foundation managers, aren't treated as disqualified persons for this purpose. Impermissible control may be direct or indirect. If a disqualified person holds any of the interests described on line 9b or 9c, or derives personal benefit from any such assets, provide detail in Part VI.

Under section 4943(f), a Type II supporting organization that accepts a contribution from a person who controls the governing body of a supported organization (or from a family member of such person, or from a 35% controlled entity of such person) is subject to the excess business holdings tax under section 4943. All Type III non-functionally integrated supporting organizations are also generally subject to the tax. For more information about excess business holdings, see the Instructions for Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code.

Section 509(f)(2) prohibits Type I and Type III supporting organizations from accepting a gift or contribution from certain persons associated with a supported organization of such supporting organization. Specifically, if a Type I or Type III supporting organization accepts a contribution after August 16, 2006, from a person who controls the governing body of a supported organization (or from a family member of such person, or from a 35% controlled entity of such person), then the supporting organization loses its status as a supporting organization. Such supporting organization must file Form 990-PF unless it qualifies as a public charity under section 509(a)(1) or (2).

Section B. Type I Supporting Organizations

A Type I supporting organization must be operated, supervised, or controlled by one or more of its supported organizations (the “controlling supported organizations”). This means that the controlling supported organizations must have a substantial degree of direction over the policies, programs, and activities of the supporting organization, and the supporting organization in turn must be responsive to the needs or demands of the controlling supported organizations, and must constitute an integral part of, or maintain a significant involvement in, the operations of the controlling supported organizations. This relationship is most clearly established when one or more supported organizations (through their officers, directors, trustees, or membership) have the unconditional power to remove and replace at least a majority of the supporting organization’s directors or trustees at any time. The relationship is also commonly established when one or more supported organizations have the power to appoint or elect at least a majority of the supporting organization’s directors or trustees at regular intervals. However, there may be other ways to establish this relationship. If the organization relies on other ways to establish the relationship, check “No” and describe in Part VI how the necessary relationship is established.

The supporting organization may benefit organizations that don't participate in the control relationship described on line 1, but only if such activity carries out the purposes of the controlling supported organizations.

Section C. Type II Supporting Organizations

A Type II supporting organization must be supervised or controlled in connection with its supported organization(s). This means that there must be common supervision or control by the persons supervising or controlling both the supporting organization and the supported organization(s) to ensure that the supporting organization will be responsive to the needs and requirements of the supported organization(s). This relationship is most clearly established when the same persons serve as all or a majority of the directors or trustees of all of the organizations involved. However, there may be other ways to establish this relationship. If the organization relies on other than overlap of at least a majority of directors or trustees of all organizations involved, check “No” and describe in Part VI how the necessary relationship is established.

Section D. All Type III Supporting Organizations

A Type III supporting organization must supply annually a written notice, addressed to a principal officer of each supported organization, which includes the following.

A description of the type and amount of all support the supporting organization provided to the supported organization during the supporting organization’s tax year preceding the tax year in which the notice is provided.

A copy of the supporting organization’s most recently filed Form 990 (the supporting organization may redact the names and addresses of contributors).

A copy of the supporting organization’s updated governing documents (including articles of organization, bylaws, and any amendments), to the extent not previously provided.

State whether during the tax year being reported the organization provided a timely notice with the required information in the required manner.

A Type III supporting organization must be responsive to the needs or demands of a supported organization. An organization meets this responsiveness test with regard to a particular supported organization if:

The supported organization has an adequate relationship with the supporting organization because:

Because of this relationship, the supported organization has a significant voice in the supporting organization’s investment policies, timing of grants, manner of making grants, selection of grant recipients, and other use of income or assets (the “significant voice” test).

In the case of a supporting organization that supported a supported organization before November 20, 1970, additional facts and circumstances such as a historic and continuing relationship between the organizations may also be taken into account in considering the responsiveness test.

If the organization has an adequate relationship with at least one supported organization only by means of a “close and continuous working relationship” or a “historic and continuing relationship,” then in Part VI explain the relationship and how it has been maintained. Also, all Type III supporting organizations that claim to meet the significant voice test must describe in Part VI the voice or role of the supported organization(s) in directing the supporting organization’s use of its income or assets.

Section E. Type III Functionally Integrated Supporting Organizations

A Type III supporting organization must constitute an integral part of one or more of its supported organizations by maintaining significant involvement in its operations and providing support on which the supported organization is dependent. To satisfy this requirement as a Type III functionally integrated supporting organization, an organization may (a) pass an Activities Test (see the instructions for Line 2 , later), (b) be the parent of its supported organizations (see the instructions for Line 3 , later), or (c) support one or more governmental entities (see Support of governmental entity , later). If the organization can't satisfy any of these tests, it may still qualify as a Type III non-functionally integrated supporting organization (see Part V , later).

A Type III supporting organization meets the integral part test for a functionally integrated supporting organization if it (1) supports at least one supported organization that is a governmental entity to which the supporting organization is responsive (as discussed in the instructions for Section D, Lines 2 and 3 , earlier), and (2) engages in activities for or on behalf of such governmental supported organization that performs the functions or carries out the purposes of such governmental supported organization and that, but for the involvement of the supporting organization, would normally be engaged in by the governmental supported organization itself. See Notice 2014-4. A Type III supporting organization that claims to meet the integral part test for a functionally integrated supporting organization by supporting a governmental entity must describe in Part VI how it met these requirements for the tax year.

Line 2. Activities Test.

To meet the activities test of a Type III functionally integrated supporting organization, substantially all of the supporting organization’s activities must (1) directly further the exempt purposes of the supported organization(s) to which the supporting organization was responsive, and (2) be activities that such supported organization(s) would normally be engaged in but for the supporting organization’s involvement.

Substantially all of the supporting organization’s activities must be “direct furtherance” activities. Direct furtherance activities are conducted by the supporting organization itself, rather than by a supported organization. Holding title to exempt-use assets and managing them are direct furtherance activities. Fundraising, investing and managing non-exempt-use assets, grant-making to organizations, and grant-making to individuals (unless it meets the requirements of Regulations section 1.509(a)-4(i)(4)(ii)(D)) aren't direct furtherance activities.

In addition, the direct furtherance activities must be activities in which, but for the supporting organization’s involvement, the supported organization would normally be involved.

Examples include holding and managing facilities used by a church for its religious purposes, operating a food pantry for a group of churches that normally would operate food pantries themselves, and maintaining local parks for a community foundation that otherwise would maintain those parks. See Regulations section 1.509(a)-4(i)(4)(v) for more detailed examples.

To qualify as the parent of all the supported organizations, a supporting organization must (1) have the power to appoint or elect, directly or indirectly, a majority of the officers, directors, or trustees of every supported organization; and (2) exercise a substantial degree of direction over the policies, programs, and activities of every supported organization.

Part V. Type III Non-Functionally Integrated 509(a)(3) Supporting Organizations

A Type III supporting organization (other than a Type III functionally integrated supporting organization) must generally satisfy a distribution requirement described in Regulations section 1.509(a)-4(i)(5)(ii) along with an attentiveness requirement described in Regulations section 1.509(a)-4(i)(5)(iii) to meet the integral part test for a Type III relationship. To satisfy the distribution requirement, the organization must make a minimum amount (distributable amount) of distributions to or for the use of one or more supported organizations. Carryovers of excess distributions from certain prior years may be used for this purpose.

Sections A through E of Part V show whether the organization has satisfied its distribution and attentiveness requirements for its tax year. Sections A and B determine the organization’s adjusted net income and minimum asset amount. These amounts are used in determining the distributable amount in Section C. Section D determines the organization’s distributions that count toward the distributable amount and determines whether the attentiveness requirement is met. Section E determines whether the distributable amount is satisfied through current distributions and prior-year carryovers, and determines carryovers to future years.

A trust is excepted from the general distribution and attentiveness requirements (and need not complete Sections A through E) if on November 20, 1970, it met and continues to meet the requirements set forth in Regulations section 1.509(a)-4(i)(9). A trust that claims this status by checking the box on line 1 at the beginning of Part V must explain in Part VI how it meets each of the requirements. A trust that has obtained a ruling from the IRS on this issue must so indicate in Part VI .

Section A. Adjusted Net Income

The principles of section 4942(f) and Regulations section 53.4942(a)-2(d) apply in determining adjusted net income. See Regulations section 1.509(a)-4(i)(5)(ii)(B).

The organization’s adjusted net income for the prior tax year is used in determining the organization’s distributable amount for the current tax year. The form also allows for reporting the organization’s adjusted net income for the current tax year for use in next year’s calculations; this reporting is optional but may be helpful if the organization anticipates being required to complete Part V next year.

Adjusted net income is gross income for the tax year less deductions allowable to a corporation subject to tax under section 11, with certain modifications discussed in the line instructions later. In computing gross income and deductions, the principles of the income tax provisions of the Code apply (except to the extent inconsistent with section 4942 or the underlying regulations), but exclusions, deductions, and credits aren't allowed unless expressly provided for under section 4942 or the underlying regulations. See Regulations section 53.4942(a)-2(d)(1).

Report the organization’s net short-term capital gain, if any. Long-term capital gains and losses from the sale or disposition of property aren't taken into account in determining adjusted net income (unless reportable on line 2 as recoveries of prior-year distributions). Net short-term capital loss can't be carried back or forward to other tax years. Amounts treated as long-term capital gains include capital gain dividends from a regulated investment company and net section 1231 gains (but net section 1231 losses are treated as ordinary losses and thus taken into account). If the fair market value of property distributed for charitable purposes exceeds adjusted basis, the excess isn't deemed includible in income.

The adjusted basis for purposes of determining gain from the sale or other disposition of property is the greater of:

The fair market value of such property on August 17, 2006, plus or minus all adjustments thereafter and before the date of disposition under sections 1011–1023, if the property was held continuously from August 17, 2006, to the date of disposition.

The adjusted basis under sections 1011–1023, without regard to section 362(c). If assets acquired before August 17, 2006, were subject to depreciation or depletion, to determine the adjustments to basis between the date of acquisition and August 17, 2006, straight-line depreciation or cost depletion must be taken into account. Any other adjustments that would’ve been made during such period (such as a change in useful life based upon additional data or a change in facts) must also be taken into account.

Recoveries of prior-year distributions include the following.

Repayments received of amounts which were taken into account as a distribution counting toward the distribution requirement in a prior tax year.

Proceeds from the sale or disposition of property to the extent that acquisition of such property was taken into account as a distribution counting toward the distribution requirement in a prior tax year.

An amount set aside and taken into account as a distribution counting toward the distribution requirement in a prior tax year to the extent it is determined that such amount isn't necessary for the purposes for which it was set aside.

Report all other gross income. Gross income includes all amounts derived from, or in connection with, property held by the organization (except as specified otherwise in the instructions for Line 1 ). Include income from any related or unrelated trade or business. Include income from tax-exempt bonds. Don't include the following.

Gifts, grants, or contributions received.

Long-term capital gains or losses or net short-term capital losses.

Income received from an estate, unless the estate is considered terminated due to a prolonged period of administration.

Distributions from a trust created and funded by another person.

Certain amounts received by an organization in the redemption of stock in a corporate disqualified person in order to avoid excess business holdings, which are treated as not essentially equivalent to a dividend under section 302(b)(1) (and thus as amounts received in exchange for the stock, giving rise to long-term capital gain or loss) if the conditions of Regulations section 53.4942(a)-2(d)(2)(iv) are met.

The deduction for depreciation under section 167 is allowed, but only on the basis of the straight-line method. The deduction for depletion under section 611 is allowed, but without regard to section 613 (percentage depletion).

No deduction is allowed except ordinary and necessary expenses paid or incurred for the production or collection of gross income, or for the management, conservation, or maintenance of property held for the production of income. Such expenses may include operating expenses such as compensation of officers and employees, interest, rent, and taxes. Where only a portion of property produces income (or is held for the production of income) and the remainder is used for charitable purposes, the expenses must be apportioned between exempt and non-exempt use on a reasonable basis.

Don't deduct the following.

Net losses from a related business or other charitable activity that produces gross income (no deduction in excess of the income from such activity).

Charitable contributions under section 170 or 642.

Net operating loss carrybacks and carryovers under section 172.

Dividends under section 241 and the sections following it (the dividends-received deductions for corporations).

Net capital losses (short-term or long-term).

Section B. Minimum Asset Amount

The rules for determining the supporting organization’s minimum asset amount are set forth in Regulations sections 1.509(a)-4(i)(5)(ii)(C) and 1.509(a)-4(i)(8), using valuation methods described in Regulations section 53.4942(a)-2(c).

The organization’s minimum asset amount for the prior tax year is used in determining the organization’s distributable amount for the current tax year. The form also allows for reporting the organization’s minimum asset amount for the current tax year for use in next year’s calculations; this reporting is optional but may be helpful if the organization anticipates being required to complete Part V next year.

In figuring the minimum asset amount, include only assets of the supporting organization that aren't used or held for use by the supporting organization (or by a supported organization, if the supporting organization provides the asset free of charge or at nominal rent) to carry out the exempt purposes of the supported organization(s). Assets held for the production of income or for investment aren't considered to be used directly for charitable functions even though the income from the assets is used for charitable functions. It is a factual question whether an asset is held for the production of income or for investment rather than used or held for use directly by the supporting organization or a supported organization for charitable purposes. For example, an office building used to provide offices for employees engaged in managing endowment funds for the supporting organization or supported organization isn't considered an asset used for charitable purposes.

When property is used for both charitable and other purposes, the property is considered used entirely for charitable purposes if 95% or more of its total use is for that purpose. If less than 95% of its total use is for charitable purposes, a reasonable allocation must be made between charitable and noncharitable use.

Certain assets (in addition to exempt-use assets) are excluded entirely from the computation of the minimum asset amount. These include charitable pledges and interests in an estate or trust (created and funded by another person) prior to distribution to the supporting organization.

Report on line 1a the average monthly fair market value of securities (such as common and preferred stock, bonds, and mutual fund shares) for which market quotations are readily available. A supporting organization may use any reasonable method to make this determination if consistently used. For example, a value for a particular month might be determined by the closing price on the first or last trading day of the month or an average of the closing prices on the first and last trading days of the month. Market quotations are considered readily available if a security is any of the following.

Listed on the New York or American Stock Exchange or any city or regional exchange in which quotations appear on a daily basis, including foreign securities listed on a recognized foreign national or regional exchange;

Regularly traded in the national or regional over-the-counter market for which published quotations are available; or

Locally traded, for which quotations can be readily obtained from established brokerage firms.

Figure cash balances on a monthly basis by averaging the amount of cash on hand on the first and last days of each month. Include all cash balances and amounts, even if they may be used for charitable purposes (see the instructions for Line 4 , later) or set aside and taken as a distribution (see the instructions for Section D, Line 5 , later).

The fair market value of assets other than securities for which market quotations are readily available is determined annually except as described later. The valuation may be made by supporting organization employees or by any other person even if that person is a disqualified person. If the IRS accepts the valuation, it is valid only for the tax year for which it is made. A new valuation is required for the next tax year.

An asset required to be valued annually may be valued as of any day in the supporting organization's tax year, provided the organization values the asset as of that date in all tax years. However, a valuation of real estate determined on a 5-year basis by a certified, independent appraisal (discussed later) may be made as of any day in the first tax year of the organization to which the valuation applies.

The value of an asset held less than a full tax year is prorated by multiplying the value of the asset by a fraction, of which the numerator is the number of days the organization held the asset during its tax year, and the denominator is 365 (366 if the tax year includes February 29). If the supporting organization has a short tax year, the value of all assets is accordingly prorated.

A written, certified, and independent appraisal of the fair market value of any real estate, including any improvements, may be determined on a 5-year basis by a qualified person. The qualified person may not be a disqualified person with respect to the supporting organization or an employee of the supporting organization.

Commonly accepted valuation methods must be used in making the real estate appraisal. A valuation based on acceptable methods of valuing property for federal estate tax purposes will be considered acceptable.

The real estate appraisal must include a closing statement that, in the appraiser's opinion, the appraised assets were valued according to valuation principles regularly employed in making appraisals of such property, using all reasonable valuation methods. The supporting organization must keep a copy of the independent appraisal for its records. If a valuation is reasonable, the organization may use it for the tax year for which the valuation is made and for each of the 4 following tax years.

Any valuation of real estate by a certified independent appraisal may be replaced during the 5-year period by a subsequent 5-year certified independent appraisal or by an annual valuation, as described earlier. The most recent valuation should be used to figure the organization's minimum asset amount.

If the valuation is made according to the above rules, the IRS will continue to accept it during the 5-year period for which it applies even if the actual fair market value of the real estate changes during the period.

If the fair market value of any securities, real estate holdings, or other assets reported on lines 1a and 1c reflects a blockage discount, marketability discount, or other reduction from full fair market value because of the size of the asset holding or any other factor, enter on line 1e the aggregate amount of the discounts claimed. Provide an explanation in Part VI that includes the following information for each asset or group of assets involved.

A description of the asset or asset group (for example, 20,000 shares of XYZ, Inc., common stock);

For securities, the percentage of the total issued and outstanding securities of the same class that is represented by the organization's holding;

The fair market value of the asset or asset group before any claimed blockage discount or other reduction;

The amount of the discount claimed; and

An explanation of the reason for the discount.

In the case of securities, there are certain limitations on the size of the reduction in value that can be claimed. The organization may reduce the fair market value of securities only to the extent that it can establish that the securities could only be liquidated in a reasonable period of time at a price less than the fair market value because:

The securities are such a large block that liquidation would depress the market,

The securities are in a closely held corporation, or

The sale would result in a forced or distress sale.

Enter the total acquisition indebtedness that applies to assets included on line 1 (prorated in the case of assets held for a portion of the year or in a short tax year). For details on acquisition indebtedness, see section 514(c)(1).

Supporting organizations may exclude from the minimum asset amount the reasonable cash balances necessary to cover current administrative expenses and other normal and current disbursements directly connected with the charitable, educational, or other similar activities. The amount of cash that may be excluded is generally 1.5% of the fair market value of all assets (minus any acquisition indebtedness). However, if under the facts and circumstances an amount larger than the deemed amount is necessary to pay expenses and disbursements, then the organization may enter the larger amount instead (prorated in the case of a short tax year). If the organization uses a larger amount, explain why in Part VI.

Enter the amount of recoveries (if any) reportable on Section A, line 2.

Section C. Distributable Amount

The organization’s distributable amount for the current tax year is ordinarily the greater of:

85% of its adjusted net income for the prior tax year or

Its minimum asset amount for the prior tax year,

The distributable amount for the first tax year that an organization is treated as a non-functionally integrated Type III supporting organization is zero rather than the amount as ordinarily determined. Such an organization should check the box on line 7. For purposes of determining whether the organization has an excess of distributions in its tax year that can be carried over to future years, the distributable amount as ordinarily determined applies to every non-functionally integrated Type III supporting organization (including an organization that checked the box on line 7 for the current year). The distributable amount as ordinarily determined is reported in Sections C and E.

In cases of disaster or emergency, the IRS may provide for a temporary reduction in the distributable amount by publication in the Internal Revenue Bulletin. In these cases, the reduced amount should be reported on line 6 and the reduction noted in Part VI.

Section D. Distributions

Section D sets forth the supporting organization’s distributions that count toward its distribution requirement, and determines whether the attentiveness requirement is met. The amount of a distribution made to a supported organization is the amount of cash or fair market value of property on the date of distribution. The organization must use the cash method of accounting for this purpose. See Regulations section 1.509(a)-4(i)(6).

Report amounts paid to supported organizations to accomplish their exempt purposes. Distributions furthering the “exempt” purposes of supported organizations not described in section 501(c)(3) refer solely to distributions for section 501(c)(3) purposes.

Report amounts paid to perform any activity that directly furthers exempt purposes of supported organizations and that would otherwise normally be engaged in by the supported organizations, but only to the extent that expenses from the activity exceed income from the activity. See the Schedule A (Form 990), Part IV, Section E, Line 2 , instructions on “direct furtherance” activities.

Report reasonable and necessary administrative expenses paid to accomplish exempt purposes of supported organizations. Don't include expenses incurred in the production of investment income.

Report amounts paid to acquire exempt-use assets. Such assets must be used (or held for use) to carry out the exempt purposes of the supported organizations. The assets may be used or held by either the supporting organization or one or more supported organizations; if the latter, the supporting organization must make the asset available to the supported organization(s) free of charge or for nominal rent. See Regulations section 53.4942(a)-2(c)(3) for further discussion of exempt-use assets.

Report qualified amounts set aside for a specific project that accomplishes the exempt purposes of a supported organization to which the supporting organization is responsive. A qualified set-aside counts toward the distribution requirement in the tax year set aside but not again when paid.

For each set-aside, a supporting organization must obtain the written approval of both the pertinent supported organization(s) and the IRS. The supporting organization must apply to the IRS for approval (using Form 8940) before the end of its tax year in which the amount is set aside. Explain in Part VI whether the organization has requested and obtained the necessary approvals for the set-aside. See Regulations section 1.509(a)-4(i)(6)(v) for more information.

Report any other distributions not described above that the organization claims are for the use of its supported organizations, and describe such distributions in detail in Part VI .

Report on line 8 the amount of distributions reported on line 1 to supported organizations that met the attentiveness and responsiveness tests, discussed later, and provide in Part VI the supplemental information, discussed later.

A Type III non-functionally integrated supporting organization must distribute at least one-third of its distributable amount each tax year to one or more supported organizations that are “attentive” to its operations and to which the supporting organization is “responsive” (as described later); thus, the line 10 amount must be at least 0.333. Carryovers of excess distributions from prior years don't count toward the attentiveness requirement.

If the line 10 amount is less than one-third (that is, the amount of distributions to supported organizations that met both the attentiveness test and responsiveness test is less than one-third of the distributable amount), then the organization doesn't qualify as a Type III non-functionally integrated supporting organization for the tax year. See Regulations sections 1.509(a)-4(i)(5)(i) and (iii). If the organization doesn't otherwise qualify as a public charity, then the organization is a private foundation and must file Form 990-PF for the tax year.

A supported organization is “attentive” to the operations of a supporting organization if, during the tax year, at least one of the following requirements is satisfied.

The supporting organization distributes to the supported organization at least 10% of the supported organization’s total support in its tax year ending before the beginning of the supporting organization’s tax year. For example, if the supporting organization and the supported organization both use a calendar year, and the supported organization has total support of $X in a year, then the supporting organization’s support in the following year must be at least 10% of $X. Where the supporting organization supports a particular department or school of a university, hospital, or church, the department’s or school’s total support is considered instead.

The amount of support received from the supporting organization is necessary to avoid the interruption of a particular function or activity of the supported organization.

The amount of support received from the supporting organization is a sufficient part of the supported organization’s total support to ensure attentiveness, based on all pertinent facts, including the number of supported organizations, the length and nature of the relationship between the supporting organization and supported organization, and the purpose to which the funds are put. The attentiveness of a supported organization is normally influenced by the amounts received from the supporting organization, but evidence of actual attentiveness to the operations (including investments) of the supporting organization is of almost equal importance. Where the supporting organization supports a particular department or school of a university, hospital, or church, the department’s or school’s total support is considered instead of the supported organization’s total support.

Amounts received from a supporting organization that are held in a donor-advised fund of the supported organization are disregarded in determining attentiveness.

See the examples in Regulations section 1.509(a)-4(i)(5)(iii)(D).

A supporting organization is “responsive” to the needs and demands of a supported organization if it meets the responsiveness test set forth in the instructions for Part IV, Section D, Lines 2 and 3 , with respect to the supported organization.

In Part VI , identify each of the supported organizations listed in Part I, line 12g, column (i), that met both of the following conditions for the tax year.

The supporting organization was responsive to the supported organization, and

The supported organization was attentive to the supporting organization. With respect to each of the identified supported organizations, set forth the facts that show how both the attentiveness test and the responsiveness test were met by the supporting organization and the supported organization.

Section E. Distribution Allocations

Section E determines whether the distributable amount for the current tax year (and any underdistribution for reasonable cause in a prior year) is satisfied through current-year distributions and carryovers of prior-year excess distributions. Section E also determines carryovers of excess distributions to future years. Several lines in Section E aren't yet applicable during the phase-in period of the new regulations for Type III non-functionally integrated supporting organizations. Those lines are grayed out.

In applying distributions, there are three basic steps.

First, apply distributions to eliminate any underdistribution for reasonable cause in a prior tax year.

Second, apply distributions to satisfy the distributable amount for the current year.

Third, carry over to future years any remaining excess distributions.

Carryovers of excess distributions from prior years are always applied in full before current-year distributions (unlike the rules for qualifying distributions by private foundations), and older carryovers are applied before newer carryovers. Excess distributions of a given year can't be carried over for more than 5 years.

X is a Type III non-functionally integrated supporting organization that for its tax year including December 28, 2020, and through its following 2021 tax year meets the requirements of Regulations section 1.509(a)-4(i)(3)(iii) as in effect prior to December 28, 2020. Under transition rules, X is deemed to meet its distribution requirement for 2021, but its distributable amount is calculated in the ordinary manner to determine its excess distributions. For 2021, X had a distributable amount, as ordinarily determined, of $80,000 and distributions of $100,000. Accordingly, X had excess distributions of $20,000. For 2022, X had a distributable amount of $95,000 and distributions of $85,000. X first applied its 2021 excess distributions carryover of $20,000 to the 2022 distributable amount of $95,000. Then, X applied $75,000 of its 2022 distributions of $85,000 to the remaining 2022 distributable amount. Accordingly, X has excess distributions of $10,000 from 2022 (2022 distributions of $85,000 minus $75,000 applied to the 2022 distributable amount), which it may carry over to 2023. For 2023, X has a distributable amount of $100,000 and distributions of $150,000. X applies the $10,000 excess distribution carryover from 2022 to the 2023 distributable amount. Then, X applies $90,000 of its 2023 distributions to the remaining 2023 distributable amount. Section E will show $0 carryovers for 2021 and 2022 (because the excess carryovers for each of those years were previously applied). In addition, Section E will show excess distributions of $60,000 in 2023 (2023 distributions of $150,000 minus $90,000 applied to the 2023 distributable amount), which it may carry over in the next 5 tax years until applied.

Y is a Type III supporting organization that for its tax year including December 28, 2020, meets the requirements of Regulations section 1.509(a)-4(i)(3)(iii) as in effect prior to such date, but doesn't meet such requirements in its following 2021 tax year (because of underdistributions for which the prior regulation didn't expressly provide a reasonable cause exception). Therefore, Y didn't benefit from the transition rule for its 2021 tax year. Y's distributable amount was $120,000 for 2021. Y made distributions of that amount and had no excess distributions to carry over to 2022. Y calculated that its distributable amount was $150,000 for 2022 and made distributions of exactly that amount in 2022. Early in its 2023 tax year, Y discovers that its distributable amount for 2022 actually was $200,000. Within 180 days, Y makes a $110,000 distribution ($50,000 to cover the underdistribution for 2022 and $60,000 as part of its 2023 distributions). Later in the 2023 tax year, Y makes additional distributions totaling $200,000. Y’s distributable amount in the 2023 tax year is $190,000. In its 2023 Form 990, Y claims reasonable cause for the 2022 underdistribution due to a clerical error. Under these circumstances, Y first applies $50,000 of its 2023 distributions of $310,000 to the 2022 underdistribution of $50,000 ($200,000 minus $150,000), then applies $190,000 of its remaining 2023 distributions of $260,000 ($310,000 minus $50,000) to satisfy its 2023 distributable amount. Y’s remaining $70,000 of distributions in 2023 ($310,000, minus $50,000 allocated to 2022, and minus $190,000 allocable to 2023) are excess distributions that may be carried over to future years.

Report the distributable amount for 2023 from Section C, line 6.

An organization that is treated as a Type III non-functionally integrated supporting organization for the first time in its 2022 tax year will have a distributable amount of zero during the 2022 tax year.

If the organization had any underdistributions for a prior tax year (2021 or 2022), then it didn't qualify as a Type III non-functionally integrated supporting organization in that tax year and subsequent years (and would be classified as a private foundation unless it met the requirements of another public charity status) unless it met the requirements of the reasonable cause exception or the judicial proceeding exception discussed in the instructions for Lines 5 and 6 , later. If the organization met either of these exceptions, explain in detail in Part VI how the organization met the requirements for the exception.

On lines 3d and 3e, enter the amounts reported on lines 8d and 8e, respectively, from the organization's return for the 2022 tax year. The sum of the amounts on lines 3d and 3e is also reported on line 3f. The amount reported on line 3f is then applied in the following priority.

First to any prior-year underdistributions on line 3g,

Second (if any remaining amount) to the current-year distributable amount on line 3h, and

Third (if any remaining amount) on line 3j for carryover to future years.

Apply the current-year distributions (from Section D, line 7) in the same order of priority as described in the instructions for Line 3 to any prior-year underdistributions (line 4a) and current-year distributable amount (line 4b) remaining after applying carryovers on line 3. Any remaining distributions are reported on line 4c for carryover to future years.

If the current-year distributable amount is greater than the sum of the excess distributions carryover from the prior year plus the current-year distributions, then the organization doesn't meet the distribution requirement and can't qualify as a Type III non-functionally integrated supporting organization for the tax year, unless an exception applies. If the organization doesn't qualify as a supporting organization or otherwise as a public charity for the tax year, then it is a private foundation and must file Form 990-PF for the tax year and subsequent years until private foundation status is terminated under section 507. If either the reasonable cause or judicial proceeding exception applies, then explain in detail in Part VI how the organization met the requirements for the exception.

An organization that fails to distribute its distributable amount won't be classified as a private foundation for the year of the failure if the organization establishes to the satisfaction of the IRS that:

The failure was due to unforeseen events or circumstances beyond its control, a clerical error, or an incorrect valuation of assets;

The failure was due to reasonable cause and not to willful neglect; and

The distribution requirement is met within 180 days after the organization is first able to distribute its distributable amount notwithstanding the unforeseen events or circumstances, or within 180 days after the clerical error or incorrect valuation was or should have been discovered.

An organization is excused from meeting the distribution requirements to the extent of a conflicting mandatory provision in its governing instrument, if a judicial proceeding is pending to reform a governing instrument that prohibits compliance, under the circumstances set forth in Regulations section 1.509(a)-4(i)(11)(ii)(E).

Enter on line 7 the prior-year carryover and the current-year distributions to the extent not applied to prior-year underdistributions and the current-year distributable amount (and not already carried over for 5 tax years). The organization may carry over these amounts to future years. Prior-year carryovers are applied before current-year distributions.

Use Part VI to provide narrative information required by these instructions or to supplement responses to questions on Schedule A (Form 990). Identify the specific part and line number that the response supports, in the order in which they appear on Schedule A (Form 990). Part VI can be duplicated if more space is needed.

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Understanding the IRS Form 990
Form 990
How to Complete Part I of Form 990-EZ
Form 990 Pdf
How to Read a Form 990 and Find Good Fit Grant Funders
Form 990-W Estimated Tax on Unrelated Business Taxable Income for Ta…

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IRS Form 990 Interactive Workshop with Plante Moran
990EZ for Nonprofits
Как проводить презентацию со 100% результатом #АлексейЗайцев
Tax990 Customer Reviews
Как сделать убедительную презентацию стартапа: пошаговый алгоритм
Demystifying the 990: A guide to understanding nonprofit financial disclosures

COMMENTS

Form 990 Resources and Tools
Form 990-N (e-Postcard) is an annual notice. Form 990 is the IRS' primary tool for gathering information about tax-exempt organizations, educating organizations about tax law requirements and promoting compliance. Organizations also use the Form 990 to share information with the public about their programs. Additionally, most states rely on the ...
About Form 990, Return of Organization Exempt from Income Tax
Organizations that file Form 990 or Form 990-EZ use this schedule to provide information on certain financial transactions or arrangements between the organization and disqualified persons under section 4958 or other interested persons. This schedule is also used to determine whether a member of the organization's governing body is an ...
PDF How to Read IRS Form 990 & Understand its Importance
Form 990-N ("ePostcard") is an eight-question, electronic return that a nonprofit may file if its gross receipts are normally <$50,000. Form 990-EZ is a two-page return that a nonprofits may file if its gross receipts for a tax year were <$200,000 and assets were <$500,000. Form 990 is the "long form" that all other 990 filers must file if ...
Instructions for Form 990 Return of Organization Exempt From Income Tax
Ann. 2021-18 revoked Ann. 2001-33. Ann. 2001-33, 2001-17 I.R.B. 1137, provided tax-exempt organizations with reasonable cause for purposes of relief from the penalty imposed under section 6652(c)(1)(A)(ii) if they reported compensation on their annual information returns in the manner described in Ann. 2001-33 instead of in accordance with certain form instructions.
Form 990 Preparation Tips
The presentation in the Form 990 is more extensive than that shown in the audited financial statements and is complicated. The revenue and expenses are segregated in the revenue section of the Form 990, while the audited financial statements may show this information as a net number. The total revenue is also broken out by contributions and ...
A Comprehensive Guide to Form 990 for Nonprofits!
The specific form that your organization should file depends on its finances and structure. Here is a description of each: Form 990-N - Filed by organizations with gross receipts of less than or equal to $50,000. Form 990-EZ - Filed by organizations with gross receipts of less than $200,000 and total assets less than $500,000.
PDF Understanding IRS Form 990 04-21-21
Understanding IRS Form 990. April 21, 2021 3-5PM. 1. Laurence Scot, MBA, CPA. Skody Scot & Co., CPAs-Co-Founder & Co-Managing Partner. "30 Years Servicing and Advising NFPs!". 520 Eighth Avenue, Suite 2200, NY, NY 10018 212-967-1100 X203 [email protected]. Understanding IRS Form 990 General Introduction.
PPT PowerPoint Presentation
Overview of the Form 990 Online E-Filing System Drop-down banner menus provide easy navigation from any screen to all Form 990 or 990-EZ sections, schedules, attachments, and instructions. ... PowerPoint Presentation Author: Jon Durnford Last modified by: Tom Pollak Created Date: 2/26/2004 4:49:54 PM
Understanding Nonprofit Financial Statements and the Form 990
Form 990. IRS Form 990 is the return required for organizations that have been determined to be exempt from income tax. The return is due the 15 th day of the 5 th month following the end of fiscal year. There is an extension of up to 6 months available. For example, ...
PDF How to Read the IRS Form 990 & Find Out What it Means
A reader of the filer's Form 990 can find out about unrelated business income that the filer may have generated by examining Part VII (Analysis of Income-Producing Activities) on page 6 of the Form 990. Click here for an Expansion that explains Part VII. Line 2 income also includes income from government contracts.
PDF GOVERNANCE AND FORM 990: UNDERSTANDING THE WHY AND THE WHAT February 7
GOVERNANCE AND FORM 990: UNDERSTANDING THE WHY AND THE WHAT February 7, 2014. Darren B. Moore. Bourland, Wall & Wenzel, P.C. 301 Commerce Street, Suite 1500 Fort Worth, Texas 76102 (817) 877‐1088 E‐mail: [email protected] Blog: moorenonprofitlaw.com Twitter: @darrenbmoore ©Bourland, Wall & Wenzel, P.C.
Form 990 Preparation
Form 990 Preparation. 1. 990 - THE LEARNING CURVE Sunny Wong, Partner January 22, 2010. 2. Filing Requirements 2007 Tax Year (Filed in 2008 or 2009) Gross receipts normally ≤ $25,000 File 990-N Gross receipts > $25,000 and < $100,000, and Total assets < $250,000 File 990-EZ or 990 Gross receipts ≥ $100,000, or Total assets ≥ $250,000 ...
Required Filing (Form 990 Series)
Non-Cash Contributions (instructions included in schedule) Schedule N PDF. Liquidation, Termination, Dissolution, or Significant Disposition of Assets (instructions included in schedule) Schedule O PDF. Supplemental Information to Form 990 (instructions included in schedule) Schedule R PDF. Related Organizations and Unrelated Partnerships PDF.
Understanding Schedule A on the Nonprofit Form 990
The first schedule in the series is Schedule A - Public Charity Status and Public Support. Schedule A is required for Section 501 (c)3 organizations or Section 4947 (a) (1) charitable trusts. Although there are six parts to the schedule, only certain parts need to be completed based on the organization's reason for public charity status ...
Reporting Officers Form 990
The board of directors is the governing body of a nonprofit and ultimately responsible for the o rganization's activities. This is why it is so important to make sure that you report the proper individuals on your Form 990. If any possible issues arise, the individuals listed in Part VII were providing the oversight during the tax period.
What Nonprofits Should Know About Accounting for the Employee Retention
Form 990 Presentation. In general, Form 990 reporting follows the book treatment of revenue and expense, with some exceptions. The ERC should follow the book reporting. ... Form 990, Schedule B — If the amount rises to the level of Schedule B reporting based on the general rule ($5,000 or more) or the special rule (2% of Form 990, Part VIII ...
Form 990 PowerPoint Presentation, free download
Presentation Transcript. IRS Forms 990 as a Research ToolMark HagerCenter on Nonprofits and PhilanthropyThe Urban Institute. Form 990 • Charities with federal charitable exemption must file annually. • In 1980s, states began to adopt Form 990 as their required form as well. • Public document.
Gifts-in-kind: Valuation, Presentation and Disclosures
Financial statement and Form 990 presentation; GAAP and Form 990 disclosures for contributed nonfinancial or noncash assets (gifts-in-kind) Learning Outcomes. Identify situations requiring in-kind contributions to be reported or not to be reported. Calculate the value of in-kind contributions.
Sisters Of Mary Of The Presentation Health Corporation
About This Data. Nonprofit Explorer includes summary data for nonprofit tax returns and full Form 990 documents, in both PDF and digital formats. The summary data contains information processed by the IRS during the 2012-2019 calendar years; this generally consists of filings for the 2011-2018 fiscal years, but may include older records.
Sisters of Mary of the Presentation Health Corporation
This organization is required to file an IRS Form 990 or 990-EZ. Sign in or create an account to view Form(s) 990 for 2022, 2021 and 2020. Register now. Is this your nonprofit? ... Sisters of Mary of the Presentation Health System facilitates the management and operations of several related healthcare organizations which are located in North ...
PDF 2023 Instructions for Form 990 Return of Organization Exempt From
An organization's completed Form 990 or 990-EZ, and a section 501(c)(3) organization's Form 990-T, Exempt Organization Business Income Tax Return, are generally available for public inspection as required by section 6104. Schedule B (Form 990), Schedule of Contributors, is available for public inspection for section 527 organizations filing Form
PDF 2021 Form 990
Form 990 Department of the Treasury Internal Revenue Service Return of Organization Exempt From Income Tax Under section 501(c), 527, or 4947(a)(1) of the Internal Revenue Code (except private foundations)
PDF BERDO REVIEW BOARD PUBLIC HEARING
An applicant's ﬁnancial size and stability (990 form) Clarifying this will be asked in the google form application Add a question explicitly asking plans to use labor from local, co-op, MBWE, disadvantaged business enterprises, and/or local workforce development programs Adding a question of the applicant and any
PDF P2022-0003 and P2022-0004 Lake George Park Commission (LGPC)
Each plant can produce approximately 100 seeds per season, but this species is much more successful at vegetative reproduction via fragments and runners. After flowering, this species can undergo auto-fragmentation; fragments can be transported via wind, waves, or by human activity. First Detected in 1980s. $ 7 Million Spent Since Program First ...
Instructions for Schedule A (Form 990) (2023)
Example 1. An organization checks "Cash" on Form 990, Part XII, line 1. It should report the amounts in Part II or Part III using the cash method. If the organization filed a 2022 Schedule A (Form 990) using the cash method, it should report in the 2019 through 2022 columns on the 2023 Schedule A (Form 990) the same amounts that it reported in the 2019 through 2022 columns on the 2022 ...

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