Form 990/990-EZ Schedule A - Public Charity Status and Public Support- Updated April 1, 2022 - 2.00 PM - Admin, ExpressTaxExempt
Table of Contents
1. What is the Purpose of Form 990 Schedule A?
Schedule A is generally used by Nonprofits and tax-exempt organizations to provide required information about the public charity status and public support.
Organizations must make Form 990 Schedule A available for public inspection. This allows members of the public, such as donors and contributors, to view the organization's activities and ensure they are fulfilling their mission.
2. Who Must File Form 990 Schedule A?
3. What Accounting Method to use for calculating Schedule A?
4. Instructions to complete Schedule A with Form 990/990-EZ
Part I: Reason for Public Charity Status
To complete Schedule A, all organizations should check any one of the boxes on lines 1 through 12 to represent the reason that the organization is a public charity for the tax year.
The reason can be the same as stated in the organization's tax-exempt registration letter from the IRS or following IRS determination letter, or it can be different.
Part II - Support Schedule for Organizations Described in Sections 170(b)(1)(A)(iv) and 170(b)(1)(A)(vi)
An organization that doesn't check any of the boxes on part I, shouldn't file Form 990, Form 990-EZ, or Schedule A (Form 990 or 990-EZ) for the tax year. Instead the Organization should file Form 990-PF.
Line 5 - An organization operated for the benefit of a college or university, owned or operated by a governmental unit described in section 170(b)(1)(A)(iv)
Line 6 - A federal, state, or local government or governmental unit described in section 170(b)(1)(A)(v).
Line 7 - An organization that normally receives a substantial part of its support from a governmental unit or the general public described in section 170(b)(1)(A)(vi).
Part II is only to provide the values of gifts, grants, and contributions accounted towards public support. Program service revenue is excluded.
It is necessary to track large donations for purposes of Schedule A, Part II, as excess contributions must be calculated and excluded from public support.
Excess contributions are those that exceed 2% of the total contribution revenue for a five-year rolling period. Governmental agencies and other 501(c)(3) non-profit organization's contributions are excluded from the calculation of excess contribution.
The calculated Public support should be reported on line 14. To meet the public support test, the calculated percentage of public support must be greater than 33 1/3%.
Part III - Support Schedule for Organizations Described in Section 509(a)(2)
If the Organization selected under Part I, Box 10 was selected, Part III should be completed.
Gifts, grants, contributions and program service revenue counts towards the public support calculation should be reported on Part III.
Report the calculated public support on line 14. To meet the public support test, the percentage of public support calculated must be greater than 33 1/3%
Part IV – Supporting Organizations
If you complete line 11 in Part 1, you must complete Part IV.
The sections to complete will depend on the type of supporting organization (I, II, or III), but all supporting organizations must complete Section A.
Part V - Type III Non-Functionally Integrated 509(a)(3) Supporting Organizations
Complete Part V, if your organization is a Type III Non-Functionally integrated supporting organization.
This part helps organizations inform the IRS if the supporting organization met the distribution requirement. The requirement that the organization must make a minimum amount of distributions to or for the use of one or more supported organizations.
Part VI – Supplemental Information
Provide narrative information for any of the lines in the earlier parts requiring further explanation here. Also, Report any additional details of the organization here.
5. Other Resources in Form 990 Schedule A
What are public support and total support tests?
Public and total support tests are computations designed by the IRS to determine the amount of support an organization receives from different types of contributions. The gross amount of these various contributions determines if the public adequately supports the organization to maintain both its exempt organization status and its exclusion from private foundation classification.
How do I calculate contributions towards the Public Charity support test?
Many forms of contributions are considered Public Charity. The IRS considers gifts, grants, donations, membership fees, and certain gross receipts as public support. However, gross investment income and net unrelated business taxable income are not considered public support.
For the public support test, an organization should consider all gifts, grants, and contributions received. Also to consider are membership fees, exempt function income, interest and dividends, net income from unrelated business activities (UBI), tax revenues levied for organization benefit, the value of services or facilities furnished by a governmental unit, and other income. This is the “total support” and will be the denominator in the dividing equation.
To find the public support, total up all of the previously mentioned contributions except for interest, dividends, net income from unrelated business activities, and other income. From this number, the organization will then subtract out all income from disqualified persons and excess exempt function income. This new total is the public support total and will be the numerator in the dividing equation.
Divide public support total with the total support amount in percentage form is the percent of public support the organization has received during the tax year.
Calculate the contributions towards the public charity support test
1. Gifts, grants, and contributions received (do not include unusual grants)
2. Membership fees received
3. Exempt function income
4. Interest, dividends, etc.
5. Net income from unrelated business activities (UBI)
6. Tax revenues levied for organization benefit
7. Value of services or facilities furnished by governmental units
8. Other income (do not include gain/loss from sale of capital assets)
9. Total of lines 1 through 8
10. Add lines 1, 2, 3, 6, and 7
- a. Income from disqualified persons
- b. Excess exempt function income
12. Line 10, minus lines 11a & 11b = public support (numerator)
13. Total support from line 9 (denominator)
14. Public support percentage (line 12 divided by line 13)
What is the difference between a public charity and a public foundation?
The most significant difference between a public charity that is a tax-exempt organization and a private foundation is that an exempt organization must file either a Form 990-N, 990-EZ, or 990. In contrast, the private foundation must file a Form 990-PF. A deciding factor in this is the amount of public support the organization received during its tax year.
What is the 10% fact and circumstance test?
If an organization receives more than 10% but less than 33 ⅓% of its support from the general public or a governmental unit, it can qualify as a public charity. To do that, it has to establish that it normally receives a substantial part of its support from governmental units or the general public.
Schedule A: Section Information
Section 509(a)(1) excludes from private foundation classification these organizations: churches, schools, hospitals, endowment funds for a state university’s library, governmental entities, and publicly supported charities. These organizations engage in inherently public activities.
Section 509(a)(2) excludes from private foundation classification those publicly supported organizations that receive more than ⅓ of support from gifts, grants, contributions, membership fees, and certain gross receipts but not more than ⅓ from gross investment income and net unrelated business taxable income.
Section 170(b)(1)(A)(iv) organization is one formed for the principal purpose of engaging primarily in the conduct of medical research. An organization will normally be considered to be formed for this reason if it is expressly organized to conduct medical research and is engaged primarily in the conduct of medical research.
Section 170(b)(1)(A)(vi) organization is one that normally receives a substantial part of its support from a governmental unit or direct or indirect contributions from the general public. Organizations that typically qualify under this section are museums of history, art, or science, libraries, community centers to promote the arts, organizations providing facilities for the support of an opera, symphony orchestra, ballet, or repertory drama or some other direct service to the general public.
6. Choose ExpressTaxExempt to file your Form 990/990-EZ with Schedule A
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