990 Schedule I: Grants and Other Assistance in the US

Tuesday May 24, 2022 comments

Any accounting business and tax advice contained in this podcast is not intended as a thorough in depth analysis of specific issues. Nor is it a substitute for forming information. Nor is it sufficient to avoid tax related penalties. If you have specific questions that you need advice for, be sure to schedule a strategy session and not solely rely on information in this podcast. 

Hey everyone, thanks for tuning in. This is actually going to be the last episode we do on the 990, at least for this season. And so we are actually talking about the 990 Schedule I today. It's the grants and other assistance to governments, organizations and individuals in the US. So the reason I want to talk about this one is because over the last few years, specifically for the pandemic, there have been more organizations who have been giving out assistance to people, even if not necessarily to the government and other organizations. 

And so this is a form that's probably new to you all and I wanted to make sure that we touch base on what is it, what's important, and some things that I think people ask that you don't necessarily need to give. And so what you want to make sure you're doing to make sure this form is easy for you to manage, is you want to make sure you have a system that is tracking what type of assistance you give out. 

So if you are an organization who has been giving direct aid, or emergency assistance, maybe you're giving out food, housing assistance, that you have a system that is tracking, who are you giving assistance to, how much assistance are they getting? And then you want to make sure your system is tracking? Did we give this to them in cash or did we give this to them in a non cash form? So did we give them food which we value based off of poundage? Do we give them clothing? So think through what it is that you're doing and what you're giving? 

The reason I say this is because part of what is necessary is if you're giving more than $5,000 of assistance, you would need to disclose this information. And you need to be able to say, Who did we give it to? How much did they get? And again, this is if you're giving more than $5,000, you're gonna need to be able to track that information. And so if you're keeping that list, you could run a report, essentially, and find out how much of this do we need to disclose? 

The reason I also want to mention this is because I think that this would be a really good marker for your organization to see how things have changed. You're going to be able to say how much because that's another question that's going to be in this form. For those of you this is your first time listening to this series about 990s. We’re looking through the 990 compliance guide, the 2021 edition, because at the time of this recording, we are in 2022. And so people will be filing their return for 2021. This is published by Wolters Kluwer and it's prepared by Clark Newberg. Clark Newberg is a fairly well established nonprofit firm, we're actually working with them with one of our clients and so I'm kind of excited to work with them. Ooh, I like to use your reference materials. So I'm excited to know what you have to say about the way I do things.

So what do you want to be able to say on the first part of the schedule, it talks about where you're giving money to organizations and domestic governments, and it's for any recipient that received more than the $5,000? So again, you want to be able to track who are you giving money to? And how much are you giving them? When you're talking about organizations and governments, you're gonna have to be able to list their EIN number. So that's the employer identification number, if they’re a nonprofit, or what type of IRS code that they get, and how much do they get, if they're getting cash or non cash, if they're not getting cash, like how do you know how much you gave them? Did you do an appraisal? Is it based off of what you had originally recorded in your records. So book value is just the fair market value based off of what's available at the time and then the purpose of the grant or assistance, so housing assistance, scholarships, that type of thing. 

And then there is the section on cash or assistance to domestic individuals. And this is again where you have said yes, we've done this, we've given more than 5000 out however here what I do like is that you don't actually need to say the names so I've seen tax preparers ask for a list of the People and tax identification number. And this is why I say no, don't give that to them. Because if they don't fall into that first category of domestic organizations and domestic governments, the IRS didn’t ask them for that. 

And so yes, you might want to know the names for informational purposes to make sure that this is something that is necessary. But you do not need to go ahead and say, Oh, here's everyone's social, no terrible, terrible idea. So when you're giving it out to individuals, you want to be able to say like, what type of grant or assistance? Is this direct aid? Is this housing assistance? How many people? 

This is really important, in my opinion, because then you could see, on average, are we skewed in any one direction? Is this a cash or non cash and again, the same information from before with evaluation, and then description of the non cash assistance. So those are things that I think in your own records, so this points back to how you're doing your record keeping, especially if you're new to giving out assistance. Is this information that you are able to pull a report to do? 

Again, this might be something your program team is managing, and so may not be something that it's in your accounting records as explicitly, but being sure that someone is tracking that it should be in your accounting records, though. So if you are saying like, hi, we gave out this much money or this much in this instance, it should be somewhere in your accounting records. So there should be a communication between your program team or whoever's managing the records with your finance team so that they should be reasonably around the same information. 

And it's more about fine tuning fee accuracy, I would recommend you do that quarterly, if not annually, if it's not a monthly type of activity. All right. So the one thing I did want to point out what's considered grants and other assitance, and what is not grants. So this is why I think it's really important that you're clear about what you're doing and why you're doing it. 

So what is a grant or assistance? It’s an award, it's a prize, maybe it's a stipend or a scholarship. Maybe it's a research grant. So those are prizes. Those are grants, those are other assistance, what is not grant assistance? Salaries. So if you have paid an employee, it is not a grant or assistance, if you have paid an independent contractor, so you paid them for a service that they did, that is not a prize, that's not a stipend, that's a payment. So if they're an independent contractor, you're like, hi, do this thing for me. And I will give you this money, there's a direct exchange, that is not going to be a grant or other assistance. 

One of the ones that I think doesn't get mentioned enough is like grants affiliates not organizing a legal entity separate from the filing organization. So these are organizations that you're like, Oh, we're associated, they sort of fall under our heading, but they're not a separate entity. This is specifically, maybe you are part of a religious organization that has, like smaller chapters, smaller branches are related in this way and they're not like separate entities. They don't do their own filing. So any money going between the two is not going to fall into this grant or other assistance.

So those are the pieces that I thought would be really helpful to point out, I would say that you want to think through how you are doing this information. There is another form that talks specifically about non-US places outside of the United States. That's a different schedule. I'm not going to dig into that without prompting from you. So if you do want to hear about the other schedules or any other feedback, I would love your information. I would love to know what you want to hear. Thanks for tuning in to another episode of The Nonprofit Ace Podcast. I'm your host, Chyla Graham. Be sure to subscribe wherever you're listening to leave me a review and you can follow me on social media. I'm at CNRG so CNRG Accounting on Instagram and Facebook.

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