Supporting Organizations: Get Ready for the Expanded Schedule A to Form 990
If you are a supporting organization, completion of the Form 990 for 2014 may be more time consuming due to significant changes to Schedule A. Schedule A now has two new sections: Part IV, Supporting Organizations, and Part V, Type III Non-Functionally Integrated 509(a)(3) Supporting Organizations. In addition, Part I, Reason for Public Charity Status (Line 11), has also been modified. These changes are summarized below.
If an organization is claiming public charity status as a supporting organization under Section 509(a)(3), it must check the box for Line 11 and indicate whether it is a Type I, II, or III supported organization, which is fairly consistent to the prior year. However, a supporting organization is now required to enter the number of supported organizations it was organized to support.
Similar to 2013, the supporting organization must include the following information related to each supported organization in a table format:
- Public charity status;
- Whether the supported organization is listed in the governing documents; and
- Amount of monetary support.
The 2014 Schedule A has an additional column for a supporting organization to disclose, at its option, an estimate of the fair market value of goods, services and use of facilities that it provided to each supported organization during the year.
The questions pertaining to whether the supported organizations have been provided with notice of the support, and whether they were organized within United States have been moved to Part IV.
All 509(a)(3) organizations, regardless of the type, will complete Part IV, Section A. This section, which consists of 11 questions (and sub-questions), serves as a self-assessment for a supporting organization to determine whether it meets the specific tests under Section 509(a)(3) of the Internal Revenue Code.
In addition to completing Part IV, Section A, Type I organizations must complete Part IV, Section B, while Type II’s must complete Section C. These sections basically confirm the following:
- Whether a majority of the board members of the supporting organization are appointed by the supported organization(s) (i.e., Type I); or
- Whether a majority of the board members of the supporting organization are also board members of the supported organization(s) (Type II).
All Type III supporting organizations must complete Section D to demonstrate that they are satisfying the notification requirements and that the supported organizations have a significant voice.
Further, functionally integrated organizations must also fill in Section E.
Type III Non-Functionally Integrated Supporting Organizations, in particular, will encounter even further disclosures on Schedule A. These organizations will be required to complete Part V to compute their adjusted net income, minimum asset amount, distributable amount and payout requirements.
Getting Ready for the Change
To ensure that all requirements can be satisfied, we highly recommend that 509(a)(3) supporting organizations review the new Schedule A, along with instructions, well before the filing deadline. (A link to the form is below.)
If you have any questions regarding these new disclosures or how your organization can prepare for the additional reporting requirements, please contact a member of Cherry Bekaert’s Nonprofit industry group.