Schedule A (Form 990-EZ or Form 990)Back To 990-EZ Schedules
Who must file 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 organization is adequately supported by the public and may maintain both its exempt organization status and its exclusion from private foundation classification.
How do I calculate the contributions towards the public charity support test?
Support is considered any and all forms of contributions. The IRS considers the following activities to be “public support”: gifts, grants, donations, membership fees, and certain gross receipts. Gross investment income and net unrelated business taxable income are not considered public support.
In order to compute the public support test, the organization will need to add up all gifts, grants, and contributions received; membership fees; exempt function income; interest and dividends; net income from unrelated business activities (UBI); tax revenues levied for organization benefit; value of services or facilities furnished by governmental unit; and other income. This total is considered the “total support” and will be the denominator in the dividing equation.
In order to find the public support, the organization will 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.
Dividing the public support total into the total support amount will give a decimal amount. This decimal amount, when put into percentage form, is the percent of public support the organization has received during its 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 unit|
|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|
|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 biggest 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, while 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 and ⅓% of its support from the general public or a governmental unit, it can qualify as a public charity if it can establish that, under all the facts and circumstances, 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.
A section 170(b)(1)(A)(iv) is an organization 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 for the purpose of conducting medical research and is actually engaged primarily in the conduct of medical research.
A section 170(b)(1)(A)(vi) organization is one that normally receives a substantial part of its support from a governmental unit or from 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 for some other direct service to the general public.