The holiday season is a popular fundraising season for charitable organizations. Often organizations can receive donations in different forms, whether volunteer hours, cash, pledges, or in-kind contributions (other than services). To help during this busy season, we’ve put together a list of common donation types and the IRS requirements when reporting these donations.
1. Non-monetary support:
Non-monetary support should not be reported in Part I. Instead, non-monetary support provided to supported organizations should be reported in Schedule A, Part IV.
2. In-kind contributions:
A common question with in-kind contributions is how to determine the value. Form 990 filers generally may use any reasonable method to determine or estimate the value of these non-cash contributions. Schedule B sets forth special instructions for valuing marketable securities. Schedule M requires reporting of the method for determining revenue attributable to different categories of non-cash contributions.
3. Reporting donation pledges:
Charitable organizations sometimes receive donations in the form of pledges, where a donor offers a promise to pay a specific amount but to make payments over months and sometimes even years. When reporting pledges on the Form 990 or 990 EZ, the IRS advises that if your organization uses the accrual method of accounting, it may discount the pledge to its present value and report this amount in the first year, and report accruals of the present value increments to the unpaid pledge in the second and third years. If your organization uses the cash method of accounting, it may only report the amount of the pledge it actually receives during each of the three years.
4. Volunteer hours:
While volunteers are truly an invaluable resource for nonprofit organizations, volunteer time cannot be reported as contributions in line 1 of Parts II or III of Schedule A. You may, however, describe the volunteer initiatives in the Form 990, under Part III, Statement of Program Service Accomplishments.
Non profit organizations can print the entire list of tips for use with filing the Schedule A at http://www.irs.gov/pub/irs-tege/schedulea_faqs_11_2009.pdf. To learn more about operating as an exempt organization, visit www.stayexempt.irs.gov. The IRS also offers live assistance Monday through Friday from 7:00 a.m. to 7:00 p.m. by calling 1-800-829-1040.
If you need to file a Form 990-EZ, or Form 990-N for your nonprofit, we invite you to consider Aplos Software, an authorized IRS e-file provider. Below are also a few of our most popular accounting blogs and tax blogs that you may find helpful.
- Which Form 990 should my nonprofit submit
- How to report fundraising events on Form 990 and Form 990 EZ
- Free Year-end Accounting Procedures Checklist
- Free Month-End Accounting Checklist
- Accountants Review Aplos Nonprofit Accounting Software
Good luck and remember this blog is not meant to be a substitute for professional accounting services, just a helpful resource. Always consult a CPA or trusted professional if you seek tax or accounting advice.