Finance & Accounting

990 Filing for Corporate Grantmakers

council-webteam — Tue, 19 Nov 2013 21:15:39 +0000

990 Filing for Corporate Grantmakers council-webteam Tue, 11/19/2013 - 16:15

990 Filing for Corporate Grantmakers

Electronic Filing: While the requirements regarding electronic filing of Forms 990 and 990-PF have not changed, the electronic filing requirement for some organizations is still relatively new. For that reason, you may want to revisit the mandatory electronic filing rules to determine whether your foundation is required to file electronically this year. For additional information on e-filing regulations for nonprofits, visit the e-file for Charities and Non-Profits page of the IRS website.

New Form 990 since the 2008 Tax Year: For corporate foundations organized as public charities, the IRS redesigned the Form 990 to be used beginning with the 2008 tax year. In other words, this form was applicable beginning with the 2008 tax year. According to the IRS, the redesign was based on the principals of “enhancing transparency, promoting tax compliance, and minimizing the burden on the filing organization.”

The redesigned form consists of one core form and 16 schedules. The number of schedules an organization will be required to fill out will depend on its activities. For example, a new schedule for reporting of grants to organizations and individuals outside of the United States may be applicable to some corporate foundations. Another schedule for hospitals, however, would not.

Public charities might find it helpful to review the form now to make sure required information is being collected throughout the year. The redesigned form and additional information can be found on the IRS website. Note that the final instructions for the redesigned Form 990 have not yet been issued.

No similar redesign project is underway for Form 990-PF.

Form 990-N: Beginning in 2008, small public charities that were not required previously to file returns may have to file an annual electronic notice, Form 990-N, also referred to as the “e-Postcard.” The requirement applies to the following small organizations:

public charities with gross receipts normally $25,000 or less for tax years ending after December 31, 2007 and before December 31, 2010
public charities with gross receipts normally $50,000 or less for tax years beginning after December 31, 2010

The IRS noted that organizations that fail to file this form for three consecutive years will lose their tax-exempt status. Most corporate foundations file either Form 990 or Form 990-PF so it is unlikely that corporate foundations will be affected by this requirement. However, it may be helpful to know that some of your small grantees have this obligation. Organizations whose grantees are required to file a 990-N may use the IRS’ online search tool, Select Check, to verify if the 990-N has been filed and to view the filing. Information on the Form 990-N is available on the IRS website.

Last updated September 2012.

Disclaimer

The information provided in this resource is based on our continuing analysis of the Pension Protection Act. Every effort has been made to ensure the accuracy of this information. Due to the complexity of the PPA and the fact that many of these provisions introduce issues that are new to the Internal Revenue Code, this information is subject to change. Please check back here and on the IRS website (www.irs.gov) for updates. This information is not a substitute for expert legal, tax, or other professional advice and we strongly encourage grantmakers and donors to work with their counsel to determine the impact of the PPA and related guidance on their particular situations. This information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.

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Public Disclosure Requirements for Foundations

council-webteam — Fri, 08 Nov 2013 18:09:07 +0000

Public Disclosure Requirements for Foundations council-webteam Fri, 11/08/2013 - 13:09

Public Disclosure Requirements for Foundations

Every organization exempt under Section 501(c)(3) of the Internal Revenue Code is required to disclose certain information to the public:

The organization’s exemption application, Form 1023, is subject to public disclosure, along with any documents supporting the application and any letters from the IRS to the organization regarding its request for exemption. Exception: If the organization filed its exemption application before July 15, 1987, and lacked the exemption application on July 15, 1987, it does not need to make available its exemption application.
The organization’s complete¹ Form 990 annual information returns filed within the past three years. Exception: Except for private foundations, donor information included in Schedule B need not be disclosed to the public.
The public must also have access to a foundation’s complete Form 990-T, Exempt Organization Business Income Tax Return including all attachments. Returns filed within the past three years beginning with the due date of the return (including any extension of time for filing) should be provided if requested.

There are two separate required components to public disclosure under federal law. First, a copy of the forms must be made available for public inspection at the foundation’s offices or another reasonable location without exception. If the foundation does not have a physical location, the public can request copies of the materials in writing. The foundation may charge a reasonable fee to cover copying and mailing costs. Second, foundations must supply a copy of each return to individuals who request them.

Copies should be provided immediately when requested in person, or within 30 days in the case of a written request (including email). The organization may charge the requester the actual postage plus up to 20 cents per page. To be able to respond to requests in a timely manner, one hint is to have a folder with all of the documents subject to public disclosure so they can be easily located if a request is made. In addition, making a public disclosure copy of Form 990 in advance allows someone the time to redact the names and addresses of donors from Schedule B to avoid inadvertent disclosure.

An alternative to providing hard copies is to make the foundation’s public disclosure documents available on a website, either its own or as part of a database maintained by another organization. The website must (1) alert readers that the document is available and provide instructions for accessing, viewing, downloading, and printing it in an accessible format; (2) must contain an exact replica of the foundation's documents (public charities may redact donor information); and (3) may not charge for downloading the documents. Note that making the information widely available does not exempt the foundation from the public inspection requirement: inquirers who come to your office should still be provided with a copy for inspection at its office(s).

Failure to comply with these requirements can result in penalties of $20 for those responsible per day for as long as the disclosure delay continues, up to $10,000 for each failure to provide a copy of the organization’s annual return(s). There is no maximum penalty for the failure to provide a copy of an exemption application, Form 1023.

Note that state laws may require additional disclosure requirements. For example, private foundations in New York are additionally required, under state law, to publish a notice in a newspaper annually that their Form 990-PF is available. Charities that solicit funds from the public may be required by state charitable solicitation laws to make certain financial information available to the public.

Finally, many organizations are choosing to disclose other information in the spirit of transparency. For example, community foundations confirmed in compliance with the National Standards for U.S. Community Foundations™, also make their annual audit available upon request. Similarly, the Council’s Stewardship Principles for Family Foundations list as a practice option to the principle of welcoming public interest and communicating openly to make public (on the Web and/or in print) the foundation's board of directors, mission, guidelines, grant process (including whether unsolicited proposals are accepted), finances, procedures, timetable, grantee list with amounts and purpose, etc.

For further information on public disclosure requirements, please visit the IRS FAQ on this topic. The IRS also has a helpful compliance guide for public charities and private foundations that includes a section on public disclosure.

¹With the exception of redacting donor information (non-private foundations only), everything else in your Form 990 is subject to disclosure, so be careful not to list any non-required sensitive information. For example, if your foundation administers a scholarship program, do not include the recipient’s social security number or contact information.

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Learning from the Future: A Resource for Planning Ahead

david.rosado@cof.org — Mon, 28 Aug 2023 18:21:53 +0000

Learning from the Future: A Resource for Planning Ahead david.rosado@cof.org Mon, 08/28/2023 - 14:21

Learning from the Future: A Resource for Planning Ahead

The Economic Scenario Planning (ESP) model is designed to help community foundations of any size and shape create five-year forecasts and plan for multiple scenarios. Community foundations using the model cite important benefits, often revising goals or making operating model changes as a result. The stories that follow demonstrate how using the ESP model helps to:

Integrate perspectives to create a common plan.
Provide a reality check for future goals.
Structure a process to facilitate board discussions about the future.
Catalyze a new call to action.
Track progress towards goals.

Stories from five different community foundations highlight differences in motivations for using the model, the way they see the future, and the decisions they are making. However, one benefit is common throughout – having a picture of the future grounded in data helps them create or change the dialogue about what defines sustainability for their foundation in the months and years to come.

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Fueling Impact: A Fresh Look at Business Model Innovation and New Revenue Sources

david.rosado@cof.org — Mon, 28 Aug 2023 18:06:12 +0000

Fueling Impact: A Fresh Look at Business Model Innovation and New Revenue Sources david.rosado@cof.org Mon, 08/28/2023 - 14:06

Fueling Impact: A Fresh Look at Business Model Innovation and New Revenue Sources

Do you want to know how community foundations are finding innovative new sources of support, and diversifying their revenue base? How new revenue sources strengthen each community foundation's differentiation and sustainability? Difficult economic times in 2008-2010 have been an important wake-up call - a reminder that diversifying revenue sources is an essential component of a strong business model.

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Taking Informed Action in Challenging Times: Helping Community Foundations during Economic Downturn

david.rosado@cof.org — Mon, 28 Aug 2023 17:57:45 +0000

Taking Informed Action in Challenging Times: Helping Community Foundations during Economic Downturn david.rosado@cof.org Mon, 08/28/2023 - 13:57

Taking Informed Action in Challenging Times: Helping Community Foundations during Economic Downturn

Following up on CF Insights' November 2008 report "Making Informed Decisions in Uncertain Times", this report is aimed at helping community foundations take informed action in relation to their operating models and community activities in reaction to the economic slump. The findings are based on quantitative and qualitative research conducted with 95 community foundations during the spring of 2009. The research findings overall underscore that the field has been able to "make lemonade" from the crisis. In light of tepid expectations for assets and gifts for the rest of 2009, community foundations are being creative and thoughtful in how they allocate precious resources and step up their community leadership.

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Align, Adapt, Aspire: Ten Years of Community Foundation Business Model Evolution

david.rosado@cof.org — Mon, 28 Aug 2023 17:52:19 +0000

Align, Adapt, Aspire: Ten Years of Community Foundation Business Model Evolution david.rosado@cof.org Mon, 08/28/2023 - 13:52

Align, Adapt, Aspire: Ten Years of Community Foundation Business Model Evolution

Community foundations understand how the traditional community foundation business model falls short of new aspirations. Sustainability is an ongoing challenge and many community foundations work towards continually adapting their business model to support a changing context and achieve enough clarity to do so in a way that is aligned with values, strategy, and culture. In Align, Adapt, Aspire: Ten Years of Community Foundation Business Model Evolution, CF Insights examines the evolution of community foundation business model and highlights principles behind successful community foundations given shifting community needs, donor priorities, and economic circumstances.

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CF Insights Interactive Strategy Model Toolkit

david.rosado@cof.org — Mon, 28 Aug 2023 17:33:01 +0000

CF Insights Interactive Strategy Model Toolkit david.rosado@cof.org Mon, 08/28/2023 - 13:33

CF Insights Interactive Strategy Model Toolkit

Building on the Activity-Based Costing methodology, the Interactive Strategy Model (ISM) helps community foundations model the impact of strategic changes on their economics.

Consulting services are available for any of our CF Insights operating model analysis tools. Email cfinsights@cof.org to learn more.

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CF Insights Economic Scenario Planning Toolkit

david.rosado@cof.org — Mon, 28 Aug 2023 17:28:20 +0000

CF Insights Economic Scenario Planning Toolkit david.rosado@cof.org Mon, 08/28/2023 - 13:28

CF Insights Economic Scenario Planning Toolkit

The Economic Scenario Planning (ESP) Model, or “Stress Test,” allows community foundations to create five-year forecasts to answer questions about the potential effects of investment market performance and donor behavior.

Consulting services are available for any of our CF Insights operating model analysis tools. Email cfinsights@cof.org to learn more.

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Making Informed Decisions in Uncertain Times: Helping Community Foundations during Economic Volatility

david.rosado@cof.org — Thu, 24 Aug 2023 15:31:18 +0000

Making Informed Decisions in Uncertain Times: Helping Community Foundations during Economic Volatility david.rosado@cof.org Thu, 08/24/2023 - 11:31

Making Informed Decisions in Uncertain Times: Helping Community Foundations during Economic Volatility

To help community foundations address twin challenges of fewer resources and greater need, CF Insights conducted research by interviewing and collecting survey responses from a cross section of 73 community foundations during the month of October 2008.

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How to Calculate the Public Support Test

emily.moses@cof.org — Mon, 22 Nov 2021 16:37:34 +0000

How to Calculate the Public Support Test emily.moses@cof.org Mon, 11/22/2021 - 11:37

How to Calculate the Public Support Test

A Chapter in Mastering Foundation Law:
The Council on Foundations Compendium of Legal Resources

In the United States, organizations that qualify to receive charitable tax-deductible contributions are described in Section 501(c)(3) of the Tax Code. These organizations are divided into two main categories—public charities and private foundations. The IRS presumes that a charitable entity is a private foundation unless it can demonstrate that it should be classified as a public charity. An organization may achieve public charity status by meeting a legal definition (e.g. churches, schools, and medical institutions), a public support test, or some legally defined relationship with another publicly supported charity.

For even the most math-phobic readers, this guide provides a convenient reference that explains the public support test as well as tools to help calculate a charity’s percentage of public support.

This chapter is divided into eight parts and four appendices:

The Public Support Test: A General Explanation

This section provides an overview of the test to show how the parts fit together.

Total Support: The Denominator

This section looks at the kinds of contributions that are—and are not—included in the total support number.

Public Support: The Numerator

This section shows the elements of total support that count as public support.

Income Excluded from Both Parts of the Public Support Fraction

This section discusses income that is excluded from the numerator and denominator of the public support fraction.

"Normally": Defining the Period of Time

This section addresses the period of time the IRS considers in determining whether a charity is publicly supported and how long that status lasts.

"Substantial": How Much Public Support is Enough?

This section explores the different ways that charities can prove their public support is substantial.

Incorporating Fundraising Events in the Public Support Fraction

This section reviews where to fit fundraising income into the public support fraction.

Consequences of Failing the Public Support Test

This section explains the consequences if a public charity fails to pass the public support test.

Appendices:

Summary of the Public Support Test
Tipping Resources
Unusual Grants
How to Calculate the Public Support Fraction Using Schedule A of Form 990

Accessing this Chapter

As a benefit of Council membership, members can download this chapter for free. Nonmembers of the Council can purchase this chapter of the Legal Compendium in our store for $149.

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Finance & Accounting

Finance & Accounting

990 Filing for Corporate Grantmakers

990 Filing for Corporate Grantmakers

Disclaimer

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Public Disclosure Requirements for Foundations

Public Disclosure Requirements for Foundations

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Learning from the Future: A Resource for Planning Ahead

Learning from the Future: A Resource for Planning Ahead

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Fueling Impact: A Fresh Look at Business Model Innovation and New Revenue Sources

Fueling Impact: A Fresh Look at Business Model Innovation and New Revenue Sources

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Taking Informed Action in Challenging Times: Helping Community Foundations during Economic Downturn

Taking Informed Action in Challenging Times: Helping Community Foundations during Economic Downturn

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Align, Adapt, Aspire: Ten Years of Community Foundation Business Model Evolution

Align, Adapt, Aspire: Ten Years of Community Foundation Business Model Evolution

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CF Insights Interactive Strategy Model Toolkit

CF Insights Interactive Strategy Model Toolkit

Questions?

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CF Insights Economic Scenario Planning Toolkit

CF Insights Economic Scenario Planning Toolkit

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Related Resources

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Making Informed Decisions in Uncertain Times: Helping Community Foundations during Economic Volatility

Making Informed Decisions in Uncertain Times: Helping Community Foundations during Economic Volatility

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Related Resources

Related Events

How to Calculate the Public Support Test

How to Calculate the Public Support Test

A Chapter in Mastering Foundation Law: The Council on Foundations Compendium of Legal Resources

The Public Support Test: A General Explanation

Total Support: The Denominator

Public Support: The Numerator

Income Excluded from Both Parts of the Public Support Fraction

"Normally": Defining the Period of Time

"Substantial": How Much Public Support is Enough?

Incorporating Fundraising Events in the Public Support Fraction

Consequences of Failing the Public Support Test

Appendices:

Accessing this Chapter

Questions?

Related Events

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A Chapter in Mastering Foundation Law:
The Council on Foundations Compendium of Legal Resources