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Column (a). Enter the name of the

employees (or their children) of the

See Reasonable effort on page 4,

substantial contributor or their 35%

interested person that benefitted from the

applicable to Part IV. Special rules permit

controlled entities.

grant or assistance. If the person has

individual or aggregate transaction

status as an interested person only

reporting.

Example. A substantial contributor to

because the person is a substantial

Business transactions. Business

the organization states that he would like

contributor, a family member of a

transactions include but are not limited to

Mr. X and Ms. Y to be beneficiaries of a

substantial contributor, a 35% controlled

contracts of sale, lease, license,

grant. The organization inquires of the

entity of a substantial contributor, or an

insurance, and performance of services,

substantial contributor whether Mr. X or

employee of a substantial contributor or

whether initiated during the organization’s

Ms. Y are interested persons with respect

35% controlled entity of a substantial

tax year or ongoing from a prior year.

to the organization because of a family or

contributor, then enter the term

Business transactions also include joint

business relationship they have with the

“substantial contributor” or “related to

ventures, whether new or ongoing, in

substantial contributor (using the pertinent

substantial contributor” (as the case may

which either the profits or capital interest

instructions and definitions), and the

be) instead of the interested person’s

of the organization and of the interested

substantial contributor replies in writing

name, in order to protect the

person each exceeds 10%. The

that they are not. Whether they actually

confidentiality of the substantial

organization’s charging of membership

are interested persons or not, the

contributor.

dues to its officers, directors, etc., are not

organization has made a reasonable

Column (b). Describe the relationship

considered business transactions for

effort in this situation.

purposes of Part IV.

between the interested person that

Schools. Colleges, universities, and

benefitted from the grant or assistance

Interested persons. An interested

primary and secondary schools are not

and the organization, such as “spouse of

person for purposes of Schedule L, Part

required to identify interested persons to

Director John Smith.” If “substantial

IV, is a current or former officer,

whom they provided scholarships,

contributor” was entered in column (a),

director, trustee, or key employee listed

fellowships, and similar financial

enter “substantial contributor” here as

on Form 990, Part VII, Section A, or any

assistance. Instead, these organizations

well. If “related to substantial contributor”

of the following.

must, in Part III, group each type of

•

was entered in column (a), then describe

A family member of a current or

financial assistance (e.g., need-based

the relationship without referring to

former officer, director, trustee, or key

scholarships, merit scholarships,

specific names, for example: “child of

employee listed in Form 990, Part VII,

discounted tuition) provided to interested

employee of 35% controlled entity of

Section A.

persons in separate lines. For each line,

•

substantial contributor.”

An entity more than 35% owned,

the school should report in column (c) the

directly or indirectly, individually or

If an interested person has interested

type of assistance and aggregate dollar

collectively, by one or more current or

person status other than by being a

amount of that assistance, unless such

former officers, directors, trustees, or key

substantial contributor or related to a

reporting would constitute an

employees listed on Form 990, Part VII,

substantial contributor, then make no

unauthorized disclosure of student

Section A, or their family members.

reference to the substantial contributor

education records under the Family

•

An entity (other than a tax-exempt

status. For example, if grantee Jane

Educational Rights and Privacy Act

organization under section 501(c) or a

Smith is both a substantial contributor and

(FERPA). Columns (a) and (b) should be

governmental unit or instrumentality) of

the spouse of Director John Smith, then

left blank for these lines.

which a current or former officer, director,

she must be listed by name in column (a),

trustee, or key employee listed in Form

and column (b) must state “spouse of

Part IV. Business

990, Part VII, Section A, or any of their

Director John Smith” or words to similar

Transactions Involving

family members, was serving at the time

effect.

of the transaction as:

Column (c). Enter the total dollar

Interested Persons

1. an officer,

amount of grants provided to the

Report in Part IV business transactions

2. a director,

interested person during the

for which payments were made during the

3. a trustee,

organization’s tax year. Also describe the

organization’s tax year between the

4. a key employee,

type of assistance and estimate its value.

organization and an interested person, if

5. a partner or member with a direct

Reasonable effort. The organization is

such payments exceeded the reporting

or indirect ownership interest in excess of

not required to provide information about

thresholds described below, and

5% (including ownership by a family

a grant or assistance to an interested

regardless of when the transaction was

member) if the entity is treated as a

person if it is unable to secure the

entered into by the parties. The “ordinary

partnership, or

information regarding interested person

course of business” exception to reporting

6. a shareholder with a direct or

status after making a reasonable effort

business relationships on Form 990, Part

indirect ownership interest in excess of

to obtain it. An example of a reasonable

VI, line 2, does not apply for purposes of

5% (including ownership by a family

effort for Part III is for the organization to

Schedule L.

member) if the entity is a professional

distribute a questionnaire annually to

corporation.

each current or former officer, director,

In general, an organization must report

Certain management company

trustee, and key employee listed in

business transactions in Part IV with

transactions with former officers, etc.

Form 990, Part VII, Section A, and each

respect to an interested person if: (1) all

A business transaction also includes a

payments during the tax year between

member of a grant selection committee

transaction between the organization and

that includes the name, title, date, and

the organization and the interested

a management company of which a

signature of each person reporting

person exceeded $100,000; (2) all

former officer, director, trustee, or key

information and contains the pertinent

payments during the tax year from a

employee of the organization (within the

instructions and definitions for Schedule

single transaction between such parties

last five tax years, even if not listed in

L, Part III. The organization is not

exceeded the greater of $10,000 or 1% of

Form 990, Part VII, Section A because

expected to distribute such a

the filing organization’s total revenues; (3)

the individual did not receive any

questionnaire to a substantial contributor

compensation payments during the tax

compensation from the organization) is a

or a related person to a substantial

year by the organization to a family

direct or indirect 35% owner, or an officer,

contributor, except (1) where the

member of certain persons exceeded

director, trustee, or key employee.

substantial contributor or such related

$10,000; or (4) in the case of a joint

person advises the organization as to the

venture with an interested person, the

Ownership. Ownership is measured by

specific recipients of grants or assistance,

organization has invested $10,000 or

stock ownership (voting power or value,

or (2) with respect to programs of the

more in the joint venture, whether or not

whichever greater) of a corporation,

organization intended primarily to benefit

during the tax year.

profits or capital interest (whichever

-3-

Instructions For Schedule L (Form 990 Or 990-Ez) - Transactions With Interested Persons - 2010 Page 3

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