Form 990 Part VIII

Contributions, Gifts, Grants, and Other Similar Amounts

Line 1. In General
On lines 1a through 1f, report cash and noncash amounts received as voluntary contributions, gifts, grants, or other similar amounts from the general public, governmental units, foundations, and other exempt organizations. The general public includes individuals, corporations, trusts, estates, and other entities. Voluntary contributions are payments, or the part of any payment, for which the payer (donor) doesn’t receive FMV from the recipient (donee) organization. Contributions are reported on line 1 regardless of whether they are deductible by the contributor. The noncash portion of contributions reported on lines 1a through 1f is also reported on line 1g.

Report gross amounts of contributions collected in the organization’s name by fundraisers.

Report all expenses of raising contributions on Part IX, column (D), Fundraising expenses. The organization must enter on Part IX, line 11e, fees for professional fundraising services relating to the gross amounts of contributions collected in the organization’s name by professional fundraisers.

Report on line 1 assets contributed to the organization by another entity in the course of the entity’s liquidation, dissolution, or termination.

Report the value of noncash contributions at the time of the donation. For example, report the FMV of a donated car at the time the car was received as a donation.

Don’t net losses from uncollectible pledges from prior years, refunds of contributions and service revenue from prior years, or reversal of grant expenses from prior years on line 1. Rather, report any such items as “Other changes in net assets or fund balances” on Part XI, line 9, and explain on Schedule O (Form 990).

The organization must report any contributions of conservation easements and other qualified conservation contributions consistently with how it reports revenue from such contributions in its books, records, and financial statements.

Reporting on line 1 according to ASC 958 is generally acceptable (though not required) for Form 990 purposes, but the value of donated services or use of materials, equipment, or facilities may not be reported. An organization that receives a grant to be paid in future years should, according to ASC 958, report the grant’s present value on line 1. Accruals of present value increments to the unpaid grant should be reported on line 1 in future years.

Contributions don’t include the following.

• Grants, fees, or other support from governmental units, foundations, or other exempt organizations that represent a payment for a service, facility, or product that primarily gives some economic or physical benefit to the payer.


• The portion of any fundraising solicitation representing payment for goods, services, or anything else at retail value.


• Unreimbursed expenses of officers, employees, or volunteers. (See the explanations of charitable contributions and employee business expenses in Pub. 526 and Pub. 463, Travel, Gift, and Car Expenses, respectively.)


• Payments received from employers for welfare benefits under plans described in sections 501(c)(9), (17), and (18). Report these amounts on line 2, Program Service Revenue.


• Donations of services such as the value of donated advertising space, broadcast air time (including donated public service announcements), or discounts on services or donations of use of materials, equipment, or facilities, even though reporting donated services and facilities as items of revenue and expense is called for in certain circumstances by GAAP. The optional reporting of donated services and and facilities is discussed in the instructions for Form 990, Part III.

Federated campaigns

Line 1a.
Enter on line 1a the total amount of contributions received indirectly from the public through solicitation campaigns conducted by federated fundraising agencies and similar fundraising organizations (such as from a United Way organization). Federated fundraising agencies normally conduct fundraising campaigns within a single metropolitan area or some part of a particular state, and allocate part of the net proceeds to each participating organization on the basis of the donors’ individual designations and other factors.

Membership dues

Line 1b.
Report on line 1b membership dues and assessments that represent contributions from the public rather than payments for benefits received or payments from affiliated organizations.

Example. M is an organization whose primary purpose is to support the local symphony orchestra. Members have the privilege of purchasing subscriptions to the symphony’s annual concert series before they go on sale to the general public, but must pay the same price as any other member of the public. They are also entitled to attend a number of rehearsals each season without charge. Under these circumstances, M’s receipts from members are contributions reported on line 1b. Membership dues that aren’t contributions because they compare reasonably with available benefits are reported on line 2, Program Service Revenue.

Membership dues can consist of both contributions and payment for goods and services. In that case, the portion of the membership dues that is a payment for goods or services should be reported on line 2, Program Service Revenue. The portion that exceeds the FMV of the goods or services provided should be reported on line 1b.

The portion of membership dues attributable to certain membership benefits that are considered to be insubstantial (for example, low-cost articles, free or discounted admission to the organization’s activities, discounts on purchases from the organization’s gift shop, free or discounted parking) may be reported as contributions on line 1, rather than as payments for goods or services on line 2. See Pub. 1771, Charitable Contributions—Substantiation and Disclosure Requirements, for more information on insubstantial membership benefits that need not be valued or reported.

Fundraising events

Line 1c.
Enter the total amount of contributions received from fundraising events, which includes, but isn’t limited to, dinners, auctions, and other events conducted for the sole or primary purpose of raising funds for the organization’s exempt activities. Report contributions received from gaming activities on line 1f, not on line 1c.

Example. An organization holds a dinner, charging $400 per person for the meal. The dinner has a retail value of $160. A person who purchases a ticket is really purchasing the dinner for $160 and making a contribution of $240. The contribution of $240, which is the difference between the buyer’s payment and the retail value of the dinner, would be reported on line 1c and again on line 8a (within parentheses). The revenue received ($160 retail value of the dinner) would be reported in the right-hand column on line 8a.

If a contributor gives more than $160, that person would be making a contribution of the difference between the dinner’s retail value of $160 and the amount actually given. Rev. Rul. 67-246, 1967-2 C.B. 104, as distinguished by Rev. Rul. 74-348, 1974-2 C.B. 80, explains this principle in detail. See also the instructions for lines 8a through 8c and Pub. 526.

Organizations that report more than $15,000 total on lines 1c and 8a must also answer “Yes” on Part IV, line 18, and complete Part II of Schedule G (Form 990).

Related organizations

Line 1d.
Enter on line 1d amounts contributed to the organization by related organizations. Don’t report amounts reportable on line 1a.

Government grants (contributions)

Line 1e.
Enter the total amount of contributions in the form of grants or similar payments from local, state, or federal government sources, as well as foreign governments. Include grant amounts from U.S. territories.

Whether a payment from a governmental unit is labeled a “grant” or a “contract” doesn’t determine where the payment should be reported on Part VIII. Rather, a grant or other payment from a governmental unit is reported here if its primary purpose is to enable the organization to provide a service to, or maintain a facility for, the direct benefit of the public rather than to serve the direct and immediate needs of the governmental unit. In other words, the payment is recorded on line 1e if the general public receives the primary and direct benefit from the payment and any benefit to the governmental unit is indirect and insubstantial as compared to the public benefit.

The following are examples of governmental grants and other payments that are treated as contributions and reported on line 1e.

• Payments by a governmental unit for the construction or maintenance of library or museum facilities open to the public.
• Payments by a governmental unit to nursing homes to provide care to their residents (but not Medicare/Medicaid or similar payments made on behalf of the residents).
• Payments by a governmental unit to child placement or child guidance organizations under government programs to better serve children in the community.

All other contributions, gifts, grants, and similar amounts not included above

Line 1f. Enter all other contributions, gifts, and similar amounts the organization received from sources not reported separately on lines 1a through 1e. This amount includes contributions from donor advised funds (unless the sponsoring organization is a related organization) and from gaming activities. For a section 501(c)(21) trust, enter the total contributions received under section 192 from the coal mine operator who established the trust. Contributions to the trust must be in cash or property of the type in which the trust is permitted to invest (for example, public debt securities of the United States, obligations of a state or local government that are not in default as to principal or interest, or time and demand deposits in a bank or insured credit union as described in section 501(c)(21)(D)(ii)).

Noncash contributions included in lines 1a–1f

Line 1g. Enter on line 1g the value of noncash contributions included on lines 1a through 1f. If this amount exceeds $25,000, the organization must answer “Yes” on Part IV, line 29, and complete and attach Schedule M (Form 990).Noncash contributions are anything other than cash, checks, money orders, credit card charges, wire transfers, and other transfers and deposits to a cash account of the organization. Value noncash donated items, like cars and securities, as of the time of their receipt, even if they were sold immediately after they were received.

Example. A charity receives a gift of stock from an unrelated donor. The stock is delivered to the charity’s broker, who sells it on the same day and remits the sales proceeds, net of commissions, to the charity. The value of the stock at the time of the contribution must be reported on line 1f and also on line 1g. The sale of the stock, and the related sales expenses (including the amounts reported on lines 1f and 1g), must be reported on lines 7a through 7d.

Total. Add lines 1a–1f

Line 1h.
Enter on line 1h the total of lines 1a through 1f (but not line 1g).

Program service revenue

Line 2.
On lines 2a through 2e, enter the organization’s five largest sources of program service revenue. Program services are primarily those that form the basis of an organization’s exemption from tax. For a more detailed description of program service revenue, refer to the instructions for Part IX, column (B).

Program service revenue. Program service revenue includes income earned by the organization for providing a government agency with a service, facility, or product that benefited that government agency directly rather than benefiting the public as a whole. Program service revenue also includes tuition received by a school; revenue from admissions to a concert or other performing arts event or to a museum; royalties received as author of an educational publication distributed by a commercial publisher; interest income on loans a credit union makes to its members; payments received by a section 501(c)(9) organization from participants or employers of participants for health and welfare benefits coverage; insurance premiums received by a fraternal beneficiary society; and registration fees received in connection with a meeting or convention

Program-related investments. Program service revenue also includes income from program-related investments. These investments are made primarily to accomplish an exempt purpose of the investing organization rather than to produce income. Examples are scholarship loans and low-interest loans to charitable organizations, indigents, or victims of a disaster.

Rental income from an exempt function is another example of program-related investment income. For purposes of this return, report all rental income from an affiliated organization on line 2.

Unrelated trade or business activities. Unrelated trade or business activities (not including any fundraising events or fundraising activities) that generate fees for services can also be program service activities. A social club, for example, should report as program service revenue the fees it charges both members and nonmembers for the use of its tennis courts and golf course.

Sales of inventory items by hospitals, colleges, and universities. Books and records maintained according to GAAP for hospitals, colleges, and universities are more specialized than books and records maintained according to those accounting principles for other types of organizations that file Form 990. Accordingly, hospitals, colleges, and universities can report, as program service revenue on line 2, sales of inventory items otherwise reportable on line 10a. In that event, enter the applicable cost of goods sold as program service expenses in column (B) of Part IX. No other organizations should report sales of inventory items on line 2.

Common types of program service revenue.

• Medicare and Medicaid payments, and other government payments made to pay or reimburse the organization for medical services provided to individuals who qualify under a government program for the services provided, and who select the service provider. See Rev. Rul. 83-153, 1983-2 C.B. 48.
• Payments for medical services by patients and their guarantors.
• Fees and contracts from government agencies for a service, facility, or product that primarily benefited the government agencies.

• Income from program-related investments. Report interest, dividends, and other revenues from those investments made primarily to accomplish the organization’s exempt purposes rather than to produce income. Examples of program-related investments include student loans and notes receivable from other exempt organizations that borrowed the funds to pursue the filing organization’s exempt function.
• Membership dues and assessments received that compare reasonably with the membership benefits provided by the organization. Organizations described in section 501(c)(5), (6), or (7) generally provide benefits that have a reasonable relationship with dues.
  
  Examples of membership benefits include:
  
  • Subscriptions to publications,
  • Newsletters (other than one only about the organization’s activities),
  • Free or reduced-rate admissions to events sponsored by the organization,
  • Use of the organization’s facilities, and
  • Discounts on articles or services that members and nonmembers can buy.

All other program service revenue

Line 2f.
On line 2f, enter the total received from all other sources of program service revenue not listed individually on lines 2a through 2e.

Total. Add lines 2a–2f

Line 2g.
On line 2g, enter the total of column (A), lines 2a through 2f.

Investment income (including dividends, interest, and other similar amounts)

Line 3.
Enter the gross amount of interest income from savings and temporary cash investments, dividend and interest income from equity and debt securities (stocks and bonds), and amounts received from payments on securities loans, as defined in section 512(a)(5), as well as interest from notes and loans receivable. Don’t include unrealized gains and losses on investments carried at FMV. Don’t deduct investment management fees from this amount, but report these fees on Part IX, line 11f.

Section 501(c)(21) trusts. Use line 3 to report income from “qualified investments” as defined in section 501(c)(21)(D)(ii) (public debt securities of the United States; obligations of a state or local government which are not in default as to principal or interest; and time or demand deposits in a bank (as defined in section 581) or an insured credit union (within the meaning of section 101(7) of the Federal Credit Union Act, 12 U.S.C. 1752(7)) located in the United States).

Income from investment of tax-exempt bond proceeds

Line 4.
Enter all investment income actually or constructively received from investing the proceeds of a tax-exempt bond issue, which are under the control of the organization. For this purpose, don’t include any investment income received from investing proceeds that are technically under the control of the governmental issuer. For example, proceeds deposited into a defeasance escrow that is irrevocably pledged to pay the principal and interest (debt service) on a bond issue isn’t under the control of the organization.

Royalties

Line 5.
Enter on line 5 royalties received by the organization from licensing the ongoing use of its property to others. Typically, royalties are received for the use of intellectual property, such as patents and trademarks. Royalties also include payments to the owner of the property for the right to exploit natural resources on the property, such as oil, natural gas, or minerals.

Gross rents — (i) Real (ii) Personal

Line 6a.
Enter on line 6a the rental income received for the year from investment property and any other real property rented by the organization. Allocate revenue to real property and personal property in the spaces provided. Don’t include on line 6a rental income related to the filing organization’s exempt function (program service). Report such income on line 2. For example, an exempt organization whose exempt purpose is to provide low-rental housing to persons with low income would report that rental income as program service revenue on line 2.

Only for purposes of completing this return, the filing organization must report any rental income received from an affiliated exempt organization as program service revenue on line 2.

Rental revenue can be from an activity that is related or unrelated to the organization’s exempt purpose. In general, rents from real property are excluded in computing unrelated business income, while rental income from personal property is included. There are special rules when rents are received from personal property leased with real property (a mixed lease). In general, rental revenue from real property is excluded from unrelated business revenue when:

• The determination of the amount of such rents isn’t based on income or net profits derived by any person from the property leased other than an amount based on a fixed percentage of the gross receipts or sales;
• The lease doesn’t include personal services other than customary ones such as trash removal and cleaning of public areas;
• Any portion attributable to personal property is 10% or less of the total rent; and
• The real property isn’t debt-financed within the meaning of section 512, 513, or 514. (Rent from debt-financed real property is generally includible in unrelated business income, but there can be exceptions based on use of the property. See Pub. 598.)

Rent received from leased personal property is generally taxable except when leased with real property, and the rent attributable to the personal property doesn’t exceed 10% of the total rents from all leased property.

Less: rental expenses

Line 6b.
Enter on line 6b the expenses paid or incurred for the income reported on line 6a. Include interest related to rental property and depreciation if it is recorded in the organization’s books and records. If the organization reported on line 2 any rental income reportable as program service revenue, report any rental expense allocable to such activity on the applicable lines of Part IX, column (B).

Rental income or (loss)

Line 6c.
Subtract line 6b from line 6a for both columns (i) and (ii) and enter on line 6c. Show any loss in parentheses.

Net rental income or (loss)

Line 6d.
Add line 6c, columns (i) and (ii), and enter on line 6d. Show any loss in parentheses.

7a Gross amount from sales of assets other than inventory

7b Less: cost or other basis and sales expenses

7c Gain or (loss)

7d Net gain or (loss)

Lines 7a through 7d.
Enter on lines 7a through 7c all sales of securities in column (i). Use column (ii) to report sales of all other types of investments (such as real estate, royalty interests, or partnership interests) and all other non-inventory assets (such as program-related investments and fixed assets used by the organization in its related and unrelated activities).

On line 7a, for each column, enter the total gross sales price of all such assets. Total the cost or other basis (less depreciation) and selling expenses and enter the result on line 7b. On line 7c, enter the gain or loss. Show any loss in parentheses.

On lines 7a and 7c, also report capital gains dividends, the organization’s share of capital gains and losses from a joint venture, and capital gains distributions from trusts.

Combine the gain or loss figures reported on line 7c, columns (i) and (ii), and report that total on line 7d. Show any loss in parentheses. Don’t include any unrealized gains or losses on securities carried at FMV in the books of account.

For reporting sales of securities on Form 990, the organization can use the more convenient average cost basis method to figure the organization’s gain or loss. When a security is sold, compare its sales price with the average cost basis of the particular security to determine gain or loss. However, for reporting sales of securities on Form 990-T, don’t use the average cost basis to determine gain or loss.

The organization should maintain books and records to substantiate information about any securities or other assets sold for which market quotations weren’t published or weren’t otherwise readily available. The recorded information should include:

• A description of the asset;
• Date acquired;
• Whether acquired by donation or purchase;
• Date sold and to whom sold;
• Gross sales price;
• Cost, other basis, or, if donated, value at time acquired;
• Expense of sale and cost of improvements made after acquisition; and
• Depreciation since acquisition, if depreciable property.

Gross income from fundraising events (not including $ of contributions reported on line 1c). See Part IV, line 18

Line 8a.
Enter in the line 8a box the gross income from fundraising events, not including the amount of contributions from fundraising events reported on line 1c. Report the line 1c amount in the line 8a parenthetical. If the sum of the amounts reported on line 1c and the line 8a box exceeds $15,000, then the organization must answer “Yes” on Part IV, line 18, and complete Schedule G (Form 990), Part II. If gaming is conducted at a fundraising event, the income and expenses must be allocated between the gaming and the fundraising event on Form 990, Part VIII; report all income from gaming on line 9a.

Compute the organization’s gross income from fees, ticket sales, or other revenue from fundraising events.

Fundraising events include:

• Dinners/dances,
• Door-to-door sales of merchandise,
• Concerts,
• Carnivals,
• Sports events, and
• Auctions.

• Sales or gifts of goods or services of only nominal value,
• Raffles or lotteries in which prizes have only nominal value, and
• Solicitation campaigns that generate only contributions. Proceeds from these activities are considered contributions and should be reported on line 1f.

Fundraising events don’t include events or activities that substantially further the organization’s exempt purposes even if they also raise funds. Revenue from such program service activities is reported on line 2.

Example. An organization formed to promote and preserve folk music and related cultural traditions holds an annual folk music festival featuring concerts, handcraft demonstrations, and similar activities. Because the festival directly furthers the organization’s exempt purpose, income from ticket sales should be reported on line 2 as program service revenue.

Fundraising events sometimes generate both contributions and income, such as when an individual pays more than the retail value for the goods or services furnished. Report in parentheses the total amount from fundraising events that represents contributions rather than payment for goods or services. Treat the following as contributions.

• Amounts paid in excess of retail value of goods or services furnished. See Example, earlier, under Line 1c.
• Amounts received from fundraising events when the organization gives items of only nominal value to recipients. See Pub. 1771.

Example. In return for a contribution of any amount, donors receive a keychain with the organization’s logo. All amounts received should be reported as contributions on line 1f and all associated expenses on the appropriate lines in Part IX, column (D). In such a case, no amounts would be reported on line 8.

Less: direct expenses

Line 8b.
Enter on this line both the cost or other basis of any items sold at the events and the expenses that relate directly to the production of the revenue portion of the fundraising activity, whether incurred before, during, or after the event. In the line 1c dinner example referred to earlier, the cost of the food and beverages served and invitation to the dinner would be among the items reported on line 8b. Indirect fundraising expenses, such as certain advertising expenses associated with raising these contributions, must be reported on the appropriate lines in Part IX, column (D), and not on line 8b.

Net income or (loss) from fundraising events

Line 8c.
Enter on line 8c the difference between lines 8a and 8b. Show any loss in parentheses. The organization must report net income from fundraising events as unrelated business revenue (column (C)) or as revenue excluded from tax under section 512, 513, or 514 (column (D)).

Example 1. If an organization receives a donation of a home theater system with an FMV of $5,000 at the time of donation; sells the system for $7,500 at an auction, after having displayed the system and its FMV (which remains $5,000) at and before auction so that its value was known to the bidders; and incurs $500 in costs related to selling the system at auction, it should report the following amounts in Part VIII.

• Line 1c (contributions from fundraising events): $2,500
• Line 1f (all other contributions): $5,000
• Line 1g (noncash contributions): $5,000
• Line 8a (gross income from fundraising events): $5,000
• Line 8a parenthetical (contributions reported on line 1c): $2,500
• Line 8b (direct expenses: $5,000 FMV on donation date + $500 in auction costs): $5,500
• Line 8c (net income from fundraising event, line 8a minus line 8b): ($500)

• Line 1c (contributions from fundraising events): $0
• Line 1f (all other contributions): $5,000
• Line 1g (noncash contributions): $5,000
• Line 8a (gross income from fundraising events): $2,500
• Line 8a parenthetical (contributions reported on line 1c): $0
• Line 8b (direct expenses: $5,000 FMV on donation date + $500 in auction costs): $5,500
• Line 8c (net income from fundraising event, line 8a minus line 8b): ($3,000)

Gross income from gaming activities. See Part IV, line 19

Line 9a.
Line 9a should include only gross income from gaming activities. It shouldn’t include contributions from gaming activities, which should be reported on line 1f. Organizations that report more than $15,000 on line 9a must also answer “Yes” on Part IV, line 19, and complete Part III of Schedule G (Form 990).

Types of gaming include, but aren’t limited to:

• Bingo
• Pull tabs
• Instant bingo
• Raffles
• Scratch-offs
• Break-opens
• Hard cards
• Banded tickets
• Jar tickets
• Pickle cards
• Nevada Club tickets
• Certain Casino nights
• Certain Las Vegas nights
• Coin-operated gambling devices including:
  • Slot machines;
  • Electronic video slot or line games;
  • Video poker;
  • Video blackjack;
  • Video keno;
  • Video bingo;
  • Video pull tab games.

Less: direct expenses

Line 9b.
Enter on this line the expenses that relate directly to
the production of the revenue portion of the gaming activity.

Direct expenses of gaming include:

• Cash prizes;
• Noncash prizes;
• Compensation to bingo callers and workers;
• Rental of gaming equipment; and
• Cost of gaming supplies such as pull tabs, bingo cards, etc.

Net income or (loss) from gaming activities

Line 9c.
Enter the difference between lines 9a and 9b. Show any loss in parentheses.

Gross sales of inventory, less returns and allowances

Line 10a.
Enter the organization’s gross income from sales of inventory items, less returns and allowances. Sales of inventory items reportable on line 10a are sales of items that are donated to the organization, that the organization makes to sell to others, or that it buys for resale. Sales of inventory don’t, however, include the sale of goods related to a fundraising event, which must be reported on line 8. Sales of investments on which the organization expected to profit by appreciation and sale aren’t reported here. Report sales of investments on line 7.

The organization must report the sales revenue regardless of whether the sales activity is an exempt function of the organization or an unrelated trade or business.

Less: cost of goods sold

Line 10b.
Enter the cost of goods sold related to the sales of inventory. The usual items included in cost of goods sold are direct and indirect labor, materials and supplies consumed, freight-in, and a portion of overhead expenses. Marketing and distribution costs aren’t included in the cost of goods sold but are reported as expenses in Part IX. For purposes of Part VIII, the organization may include as cost of donated goods their FMVs at the time of acquisition.

Net income or (loss) from sales of inventory

Line 10c.
Enter in the appropriate columns (A) through (D) the net income or (loss) from the sale of inventory items. Show any loss in parentheses.

Miscellaneous revenue — Business Code

Line 11.
Enter all other types of revenue not reportable on lines 1 through 10. Enter the three largest sources on lines 11a through 11c and all other revenue on line 11d.

Total revenue.

Line 12.
For column (A), add lines 1h, 2g, 3 through 5, 6d, 7d, 8c, 9c, 10c, and 11e.

For columns (B) through (D), add lines 2a through 2f, 3, 4, 5, 6d, 7d, 8c, 9c, 10c, and 11a through 11d.

The amounts reported on line 12 in columns (B), (C), and (D), plus the amount reported on line 1h, should equal line 12, column (A).