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immediate needs of the organization, such

confidentiality of the substantial

Example. A substantial contributor to

as payment of compensation (including

contributor.

the organization states that he would like

taxable and nontaxable fringe benefits

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

Column (b). Describe the relationship

treated as compensation) to an employee

grant. The organization inquires of the

between the interested person that

or independent contractor in exchange

substantial contributor whether Mr. X or

benefitted from the grant or assistance

for services of comparable value. Some

Ms. Y are interested persons with respect

and the organization, such as “spouse of

business transactions may be reportable

to the organization because of a family or

Director John Smith.” If “substantial

on Schedule L, Part IV.

business relationship they have with the

contributor” was entered in column (a),

Compensation to a person listed in

substantial contributor (using the pertinent

enter “substantial contributor” here as well.

instructions and definitions), and the

Form 990, Part VII, Section A (including

If “related to substantial contributor” was

substantial contributor replies in writing

taxable and nontaxable fringe benefits

entered in column (a), then describe the

that they are not. Whether they actually

treated as compensation).

relationship without referring to specific

are interested persons or not, the

Grants to employees (and their

names, for example: “child of employee of

organization has made a reasonable effort

children) of a substantial contributor or

35% controlled entity of substantial

in this situation.

35% controlled entity of a substantial

contributor.”

contributor, awarded on an objective and

Schools. Colleges, universities, and

If an interested person has interested

nondiscriminatory basis based on

primary and secondary schools are not

person status other than by being a

pre-established criteria and reviewed by a

required to identify interested persons to

substantial contributor or related to a

selection committee, as described in

whom they provided scholarships,

substantial contributor, then make no

Regulations section 53.4945-4(b).

fellowships, and similar financial

reference to the substantial contributor

Grants or assistance provided to an

assistance. Instead, these organizations

status. For example, if grantee Jane Smith

interested person as a member of the

must, in Part III, group each type of

is both a substantial contributor and the

charitable class or other class (such as a

financial assistance (for example,

spouse of Director John Smith, then she

member of a section 501(c)(5), 501(c)(6),

need-based scholarships, merit

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

or 501(c)(7) organization) that the

scholarships, discounted tuition) provided

column (b) must state “spouse of Director

organization intends to benefit in

to interested persons in separate lines.

John Smith” or words to similar effect.

furtherance of its exempt purpose, if

For each line, the school should report in

provided on similar terms as provided to

Column (c). Enter the total dollar amount

column (c) the aggregate dollar amount of

other members of the class, such as

of grants and other assistance provided to

each type of assistance, the type of

short-term disaster relief, poverty relief, or

the interested person during the

assistance in column (d), and the purpose

trauma counseling. However, grants for

organization's tax year.

of the assistance in column (e), unless

travel, study (such as scholarships or

such reporting would be an unauthorized

Column (d). Describe the type of

fellowships), or other similar purposes

disclosure of student education records

assistance provided to the interested

(such as to achieve a specific objective,

under the Family Educational Rights and

person.

produce a report or other similar product,

Privacy Act (FERPA). Columns (a) and (b)

or improve or enhance a literary, artistic,

Column (e). Describe the organization's

should be left blank for these lines.

musical, scientific, teaching, or other

purpose in providing assistance to the

similar capacity, skill, or talent of the

Part IV. Business

interested person.

grantee) like those described in section

Transactions Involving

Reasonable effort. The organization is

4945(d)(3) are not excluded from

not required to provide information about a

Interested Persons

reporting under this exception.

grant or assistance to an interested

But see Schools, later, for instructions on

Report in Part IV business transactions for

person if it is unable to secure the

how to report grants, scholarships, and

which payments were made during the

information regarding interested person

other assistance from colleges,

organization's tax year between the

status after making a reasonable effort to

universities, primary, and secondary

organization and an interested person, if

obtain it. An example of a reasonable

schools. Grants that are awards

such payments exceeded the reporting

effort for Part III is for the organization to

recognizing past achievements also are

thresholds described below, and

distribute a questionnaire annually to each

not excluded from reporting under this

regardless of when the transaction was

current or former officer, director,

exception. Grants for travel, study, or

entered into by the parties. The “ordinary

trustee, and key employee listed in Form

similar purposes do not include such

course of business” exception to reporting

990, Part VII, Section A, and each

purposes as short-term disaster relief,

business relationships on Form 990, Part

member of a grant selection committee,

poverty relief, or trauma counseling.

VI, line 2, does not apply for purposes of

that includes the name and title of each

Grants or assistance to a section 501(c)

Schedule L.

person reporting information, blank lines

(3) organization.

for the person’s signature and signature

In general, an organization must report

Column (a). Enter the name of the

date, and the pertinent instructions and

business transactions in Part IV with an

interested person that benefitted from the

definitions for Schedule L, Part III. The

interested person if: (1) all payments

grant or assistance. If the person has

organization is not expected to distribute

during the tax year between the

status as an interested person only

such a questionnaire to a substantial

organization and the interested person

because the person is a substantial

contributor or a related person to a

exceeded $100,000; (2) all payments

contributor, a family member of a

substantial contributor, except (1) where

during the tax year from a single

substantial contributor, a 35% controlled

the substantial contributor or related

transaction between such parties

entity of a substantial contributor, or an

person advises the organization as to the

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

employee of a substantial contributor or

specific recipients of grants or assistance,

the filing organization's total revenue for

35% controlled entity of a substantial

or (2) with respect to programs of the

the tax year; (3) compensation payments

contributor, then enter the term

organization intended primarily to benefit

during the tax year by the organization to a

“substantial contributor” or “related to

employees (or their children) of the

family member of a current or former

substantial contributor” (as the case may

substantial contributor or their 35%

officer, director, trustee, or key employee

be) instead of the interested person's

controlled entities.

of the organization listed in Form 990, Part

name, in order to protect the

VII, Section A exceeded $10,000; or (4) in

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Instructions For Schedule L (Form 990 Or 990-Ez) - Transactions With Interested Persons - 2012 Page 3

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