Instructions For Form 990 And Form 990-Ez - 2003 Page 22
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46Lines 13 through 15 — Program
to a trade association comprised of otherwise
501(c)(3) and (4) organizations. Section
unrelated members.
4947(a)(1) nonexempt charitable trusts and
services, management and general,
section 501(c)(3) and (4) organizations must
and fundraising expenses
Attached schedule. Attach a schedule listing
complete columns (B), (C), and (D).
the name and address of each affiliate that
Section 4947(a)(1) nonexempt charitable
received payments reported on line 16. Specify
In Part II, the organization’s expenses are
trusts and section 501(c)(3) and (4)
the amount and purpose of the payments to
designated by object classification (e.g.,
organizations. Complete Part II and then
each affiliate.
salaries, legal fees, supplies, etc.) and
enter on lines 13 through 15 the appropriate
allocated into three functions: program services
Note: Properly distinguishing between
amounts from the totals for columns (B), (C),
(column (B)); management and general
payments to affiliates and grants and
and (D) reported on line 44, Part II.
(column (C)); and fundraising (column (D)).
allocations is especially important if you use
All other organizations. All other
These functions are explained below in the
Form 990 for state reporting purposes. See
organizations are not required to complete
instructions for the columns. Do not include in
General Instruction E. If you use Form 990 only
lines 13 through 15 of the Form 990.
Part II any expense items you must report on
for reporting to the IRS, payments to affiliated
lines 6b, 8b, 9b, 10b, or 16 in Part I.
state or national organizations that do not
Line 16 — Payments to affiliates
represent membership dues reportable as
For reporting to the IRS only, use the
This expense classification is used to report
“Other expenses” on line 43 (see instructions
organization’s normal accounting method to
certain types of payments to organizations
above) may be reported either on line 16 or
report total expenses in column (A) and to
“affiliated with” (closely related to) a reporting
line 22 and explained in the required
segregate them into functions under columns
agency.
attachment.
(B), (C), and (D). However, for state reporting
Payments to affiliated state or national
requirements, see General Instructions E and
Line 17 — Total expenses
organizations. Dues paid by the local charity
G. If the accounting system does not provide
to its affiliated state or national (parent)
Organizations using only column (A) of Part II
for this type of segregation, a reasonable
organization are usually reported on line 16.
should enter the total of line 16 and line 44 of
method of allocation may be used. The
Report on this line predetermined quota
column (A), Part II, on line 17. Other
amounts reported should be accurate and the
support and dues (excluding membership dues
organizations should enter the total of lines 13
method of allocation documented in the
of the type described below) by local agencies
through 16. Organizations using Form 5500 or
organization’s records.
to their state or national organizations for
an approved DOL form as a partial substitute
Report, in the appropriate column,
unspecified purposes; that is, general use of
for Form 990 should enter the total expense
expenses that are directly attributable to a
funds for the national organization’s own
figure from Form 5500, or from the required
particular functional category. In general,
program and support services.
reconciliation schedule if Form LM-2 or LM-3 is
allocate expenses that relate to more than one
used. See General Instruction F.
Purchases from affiliates. Purchases of
functional category. For example, allocate
goods or services from affiliates are not
Line 18 — Excess or (deficit) for the
employees’ salaries on the basis of each
reported on line 16 but are reported as
employee’s time. For some shared expenses
year
expenses in the usual manner.
such as occupancy, supplies, and depreciation
Enter the difference between lines 12 and 17. If
of office equipment, use an appropriate basis
Expenses for providing goods or services
line 17 is more than line 12, enter the
for each kind of cost. However, you should
to affiliates. In addition to payments made
difference in parentheses.
report some other shared expenses in column
directly to affiliated organizations, expenses
Line 19 — Net assets or fund balances,
(C) only. The column instructions below
incurred in providing goods or services to
beginning of year
discuss allocating expenses.
affiliates may be reported on line 16 if:
Enter the balance at the beginning of the year
1. The goods or services provided are not
Column (A) — Total
as reported in column (A) of line 73 (or from
related to the program services conducted by
For column (A), total each line item of columns
Form 5500 or an approved DOL form if
the organization furnishing them (e.g., when a
(B), (C), and (D) in Part II. Except for expenses
General Instruction F applies). The balance at
local organization incurs expenses in the
you report on lines 6b, 8b, 9b, 10b, or 16 of
the beginning of the year for line 19 was the
production of a solicitation film for the state or
Part I, you should use column (A) to report all
end of the year balance for line 21 and 73 as
national organization); and
expenses the organization paid or incurred.
reported on the organization’s prior year return.
2. The costs involved are not connected
Column (B) — Program services
with the management and general or
Line 20 — Other changes in net assets
fundraising functions of the reporting
Program services are mainly those activities
or fund balances
organization. For example, when a local
that the reporting organization was created to
Attach a schedule explaining any changes in
organization gives a copy of its mailing list to
conduct and which, along with any activities
net assets or fund balances between the
the state or national organization, the expense
commenced subsequently, form the basis of
beginning and end of the year that are not
of preparing the copy provided may be
the organization’s current exemption from tax.
accounted for by the amount on line 18.
reported on line 16, but not expenses of
They may be self-funded or funded out of
Amounts to report here include adjustments of
preparing and maintaining the local
contributions, accumulated income, investment
earlier years’ activity; unrealized gains and
organization’s master list.
income, or any other source. Fundraising
losses on investments carried at market value;
expenses should not be reported as program
and any difference between fair market value
Federated fundraising agencies. These
related expenses even though one of the
and book value of property given as an award
agencies (see the instructions for line 1b)
functions of the organization is to solicit
or grant. See General Instruction G regarding
should include in their own support the full
contributions for other organizations.
the reporting of a section 481(a) adjustment to
amount of contributions received in connection
Program services can also include the
conform to SFAS 116.
with a solicitation campaign they conduct, even
organization’s unrelated trade or business
though donors designate specific agencies to
Line 21 — Net assets or fund balances,
activities. For example, publishing a magazine
receive part or all of their individual
end of year
is a program service even though the
contributions. These fundraising organizations
magazine contains both editorials and articles
Enter the total of lines 18, 19, and 20. This total
should report the allocations to participating
that further the organization’s exempt purpose
figure must equal the amount reported for the
agencies as grants and allocations (line 22)
and advertising, the income from which is
end of the year in column (B) of line 73.
and quota support payments to their state or
taxable as unrelated business income.
national organization as payments to affiliates
If an organization receives a grant to do
(line 16).
Part II — Statement of Functional
research, produce an item, or perform a
Voluntary awards or grants to affiliates. Do
Expenses
service, either to meet the grantor’s specific
not report on line 16 voluntary awards or grants
needs or to benefit the public directly, the costs
In General —
made by the reporting agency to its state or
incurred represent program service expenses.
national organization for specified purposes.
Column (A)
Do not treat these costs as fundraising
Report these awards or grants on line 22,
All organizations must complete column (A)
expenses, even if you report the grant on line 1
Grants and allocations.
unless they are using an approved DOL form
as a contribution.
Membership dues paid to other
or Form 5500 as a partial substitute for Form
Column (C) — Management and general
organizations. Report membership dues paid
990. See General Instruction F.
to obtain general membership benefits, such
Use column (C) to report the organization’s
Columns (B), (C), and (D)
as regular services, publications, and
expenses for overall function and
materials, from other organizations as “Other
These columns are optional for all
management, rather than for its direct conduct
expenses” on line 43. This is the case, for
organizations except section 4947(a)(1)
of fundraising activities or program services.
example, if a charitable organization pays dues
nonexempt charitable trusts and section
Overall management usually includes the
-22-
Specific Instructions for Form 990
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