Public Charity Status

Christian Shaeffer Exempt Non-Profit Organizations Leave a Comment

Schedule A of the 990 and 990-EZ is used by exempt non-profit organizations (NPO) to provide required information regarding public charity and support status.  NPO leaders, and even other CPA’s, sometimes ask, “what’s the purpose of this Schedule? I’m already a 501(c)(3).”

Schedule A is used by 501(c)(3) organizations, and some others, to show that they are primarily supported by the general public and not a small group of individuals.  501(c)(3) organizations not primarily supported by the general public are automatically classified as a private foundation and must file the (more restrictive) form 990-PF.

Organizations completing Schedule A must indicate, from one of 11 options, the reason for Public Charity Status.  This may seem simple, but many of the options are cryptic and thus a source of common confusion.  Often times, the reason for public charity is the same as indicated on the form 1023 application or the IRS Determination Letter.  Though it’s important to note this isn’t always the case, as support sources often change over time.  In fact, is measured over a 5 year computational period.

Besides the obvious choices (churches, schools, hospitals), two of the most common reasons for public charity status, in my experience, are options 7 and 9.  Option 7 is the most common, as it includes organizations supported by donations and grants from the general public (including individuals and corporations, etc).  Option 9 is similar but more of the support comes from ticket sales.  Museums, concert halls, and zoo’s are common examples of Option 9.

NPO compliance and reporting is very specific and can be confusing.  Be sure to consult with an experienced CPA or attorney if you have specific questions.

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