The role of nonprofit organizations is ever-changing. Over the years, the Form 990 has become more complex and is subject to more intense scrutiny by the IRS, funders and donors. Take a look at some of the most significant changes to Form 990 for 2012:
- The IRS has revised the definition of “grants and other assistance” to exclude certain payments by voluntary employees’ beneficiary associations in the Form 990 glossary.
- The IRS has also made an amendment to Appendix K, Contributions. The amendment clarifies that a donor’s phone bill for a text message meets the Sec. 170(1) (17) requirement of a reliable written record if it shows the donor organization’s name, date and amount.
- Nonprofits that have foreign investments during the tax year valued at $100,000 or more must now complete Form 990, Part 1 of Schedule F.
- Nonprofits that report their distributive share of assets in any joint ventures and other entities treated as partnerships for federal tax purposes according to the ending capital account in the partnership reported on Schedule K-1 must now complete the Balance Sheet in Part X.
- Nonprofits now need to report their distributive share of investment income, royalties and rental income from joint ventures on specific lines of Part VIII, “Statement of Revenue”.
Reporting Fundraising Events in the New Form 990
Many nonprofits are unaware of the requirements for reporting received donations. Since donations are key to a nonprofit’s continuation and success, organizations need to learn how to properly report their donations on the Form 990.
Organizations can begin by reporting their fundraising events on the form’s Schedule G – Supplemental Information Regarding Fundraising or Gaming Activities. This is required to be filed with Form 990 if the organization reports more than $15,000 of fundraising event gross income and contributions for the year. In order to accurately report fundraising events on Part II of Schedule G, the gross receipts and the value provided to donors must be divided as follows:
- Line 1: Gross receipts from the event
- Line 2: Charitable portion of event proceeds (the portion that exceeds the value of goods and services provided to the donor)
- Line 3: Fair market value of event proceeds
The fundraising event should also be reported on Part VIII of Form 990 – The Statement of Revenue. Nonprofits need to make sure that the information in this section agrees with Schedule G in order to avoid any unwanted questions by the IRS.
Learn more about Form 990 by reading our article, “Demystifying IRS Form 990 for Nonprofits”.