Turn Your Nonprofit Obstacles Into Opportunities

Nonprofit organizations serve a great purpose and make a significant difference in the community daily. Although the mission of nonprofits is positive, they are faced with various challenges along the way. Each challenge presents it own obstacles but can turn into opportunities for growth and overall victory. Here are some challenges that nonprofit organizations face and how to turn them around to make it work for your organization:

POLITICAL LEADERSHIP CHANGES

Regardless of the political party that you or your team may side with, a level of uncertainty comes with a new direction of local, state, and national governmental leadership. Groups such as nonprofits can be impacted by these changes due to the difficulty in being able to adequately conduct any long-term planning for their organization.

The best way to face this challenge is to sketch out annual objectives and goals for the upcoming year while also including backup plans that will allow you and your group to have another option to fall back on in case you have to derive from your original plan.

ADEQUATE FUNDING

Along with new technology comes new ways that donors can give donations. A way to increase donations for your organization is by having an online portal that accepts donations. By accepting financial donations online, donors will feel that they can give in a more convenient way through their tablet or mobile devices. Also invent in a Square Chip Card Reader, a device which will allow your organization to receive payments through your mobile device or iPad.

LACK OF VOLUNTEERS

In order to reach the goal that your non-profit organization has set, a few extra helping hands may be needed. An easy way to gain these helpers is by reaching out to college clubs and organizations to receive some young, vibrant volunteers. Many college students are interested in lending a helping hand and gaining some community service at the same time. Also, a good bit of college organizations have a community service initiative that they strive to complete each semester. When it comes to community service, “the more, the merrier” is sometimes best.  

It is also important to keep record of any individual or group that volunteers with you, as most will need a signature or some form of verification from a designated leader within your organization validating the time they volunteered.

RETAINING/ENGAGING DONORS

Without donors, nonprofits cannot survive. The organization-to-supporter relationship is very important. Today’s donors do not want to think that all you want from them is their money. Rather than asking for money right away, find ways to engage conversations with supporters and give them an opportunity to get to know your organization and build an emotional attachment to your work and mission. These are some good ways to keep donors invested:

• Keep them engaged and let them know that they are an integral part to the organization.
• Let donors know where their money is going and what it is supporting. Give monthly or quarterly updates via email or newsletter.

INNOVATIVE & EFFECTIVE COMMUNICATION

Many aspects of today’s communication are focused on digital outlets like social media, text messaging, and mobile app usage. Although the ways of communication have changed, that doesn’t mean that your donors have adapted or changed their preferred type of communication.

Due to this dilemma, organization leaders are having to find new ways to communicate their needs and announcements to various demographics. The best way to tackle this issue is by sending one message but taking an omni-channel approach.

Messages sent through social media would use a more “trendy” approach with non-extensive writing vs. a professional email or phone call that would be more conversational. It is also suggested and very important to survey the key constituents of your organization to see which method they prefer.

FINAL STEPS

By facing these challenges and turning them into opportunities, your organization can have an awesome year of philanthropy and service! As a nonprofit organization, it is crucial that you maintain your tax-exempt status with the IRS. ExpressTaxExempt, the #1 IRS-authorized tax e-filing solution for tax-exempt organizations, allows you to do just that. Providing security, ease, and peace of mind to organizations and its leaders, we respect the services that nonprofit organizations give to communities and are motivated to help with e-filing so you can get back to proudly making a difference in your community. With newly reduced rates, organizations can now save funds annually when e-filing. Pay us a visit at www.expresstaxexempt.com today and begin your e-filing process.

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Unique Ways to Fundraise for Your Nonprofit

Any leader of a nonprofit organization will tell you that receiving adequate funding for their organization can be somewhat of a challenge. Although charitable nonprofits usually rely on the generosity of donors to support their annual efforts, fundraising initiatives are sometimes necessary to assist with supporting the financial needs of the organization. We’ve provided some fundraising techniques that your organization can utilize for years to come!

FUNDRAISING TECHNIQUES

Collaborate with other Organizations

Reach out to other organizations in your area to host events and support each other’s endeavors.

Supporting each other can assist with finances by cutting the cost in half as well as unique ideas, planning, and execution and follow through.

Have Fun Activities Become Fundraisers

Find out what your community enjoys doing during their free time and turn it into an enjoyable fundraiser. People don’t mind giving or setting aside a few dollars to do what they enjoy.  Let’s take a Talent Show/Competition for example -- the cost of hosting a local talent show can be very inexpensive and if you have a few members of your organization that like to bake, you could sell light refreshments during the intermission of the event to make an extra few dollars. Other events such as a cook-off, charity tournament, scholarship banquet, or even the latest current trend, an escape room puzzle event.

Be Involved in Your Community

Giving back to your community is always beneficial in more ways than one. It pays to educate the community about what your organization does. By making donors aware of your community service initiatives, many will feel comfortable supporting your various endeavors and fundraising efforts. People tend to not give to groups that they know nothing about. The more exposure your organization receives, the better.

Crowdfunding

This is considered to be peer-to-peer fundraising by way of members asking their friends, family members, and coworkers for donations prior to an event and then having them participate in the event.

This type of fundraising is ideal for a marathon, walkathon, pageant, etc., and is a great way to directly involve donors.

FUNDRAISERS

When conducting planning for your organization annually, it can be a challenge to find different ways to raise money. Here are some various fundraising ideas that can be done:

FUNDRAISERS	FUNDRAISING EVENTS
50/50 Raffle or Basket Raffle Bingo	Silent Auction
Sip and Paint	Talent Show / Lip Sync Competition
Recipe Books	Battle of the Bands
T-Shirt Sales	Comedy Night / Karaoke Night
Polar Plunge	Gala
Engraved Bricks	Marathon / Walkathon
Wrapping Paper Sale (Holiday Seasons)	Rainbow Tea
Car Wash	Classic Car Show
Baby Photo Contest	Cooking Class
Penny Drive	Trivia Night
Appreciation Grams	Dinner Theatre
Pie Throwing Contest or Dunk Tank	Date Auction

For more neat fundraising ideas, click here.

Be sure to save those receipts when planning a fundraising event and know that ExpressTaxExempt is always here to be a consistent resource to you and your organization for all things tax exempt! Visit our website for any tax forms that your tax-exempt organization may need throughout this year and save even more when you e-file with our recently reduced filing rates! We’re available to assist you via phone at 704.839.2321 on Monday through Friday from 9 a.m. to 6 p.m. EST or reach out to us 24/7 via email at support@ExpressTaxExempt.com.

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5 Challenges Faced by Nonprofit Organizations

Nonprofit organizations serve a great purpose and make a difference in the community daily. In order to stay both active and effective, nonprofits have to attract supporters to their cause and then convert those supporters to become donors or members that will support their work.  

Although nonprofits serve a great purpose, they are faced with various challenges along the way. Thankfully, there is always a way to turn those challenges into opportunities. We’ve listed some of these challenges and provided you with some tips on how to turn them around and make it work for your organization:

Nonprofit Challenges

1) Retaining/Engaging Donors

Without donors, nonprofits cannot survive. The organization-to-supporter relationship is very important. Today’s donors do not want to think that all you want from them is their money. Rather than asking for money right away, find ways to engage conversations with supporters and give them an opportunity to get to know your organization and build an emotional attachment to your work and mission. These are some good ways to keep donors invested: 

• -Keep them engaged and let them know that they are part of the team. Let them know that they are an integral part to the organization. 
• -Let donors know where their money is going and what it is supporting. Give monthly or quarterly updates via email or newsletter. 

2) Lack of Resources

When finances are limited and resources are scarce, it is beneficial to form partnerships with other organizations that have the similar mission and goals. By forming and fostering these relationships, you can achieve more on a larger scale. Remember, there is strength in numbers. 

3) Adequate Funding

Acquiring the necessary funds to adequately operate your organization in its full potential may be a bit of a challenge for some groups. Organizations can solicit funding from foundations, corporations, grants, and philanthropic individuals. Reaching out to local businesses in the community along with community leaders for sponsorships or donations. 

4) Public Awareness

New non-profit groups or organizations that may not be well known in their community yet should put focus on increasing awareness about who they are and what they do. Implementing an online marketing campaign/strategy will allow for your organization to be promoted to a larger audience and can also draw the attention of potential funding sources. Utilizing social media platforms like Facebook, LinkedIn, Twitter, Instagram, and more, will also be very beneficial in reaching larger audiences. 

5) Printed Communication

The days of paper-based marketing and sales are slowly, but surely fading away. For many years, organizations depended heavily on direct mail serving as their main point of contact with current and potential donors. Although direct mail still brings in some money, it mainly targets just one age bracket, which is age 55 and over and makes it quite difficult to track who opened and read the mailer that was mailed. 

The best way to solve this problem is to move online. Instead of sending letters, send emails with an intriguing subject line and include the information that you’re trying to disseminate. Also, if your organization has a website, you can add a “Donate Now” button to your home page which will allow donors to give online. Having the capability to receive donations online can also encourage donors to set up automatic payments and donations towards your organization each month. Plus, millennials are more prone to make donations via text or online if they are contacted through that medium. 

How To Maintain Tax-Exempt Status

In order to remain as a tax-exempt organization or to receive tax deductible donations to sustain the operation of your organization, you must in good standing with the IRS. This status can be maintained by e-filing with ExpressTaxExempt. Within minutes you will be able to successfully e-file one of the forms including in our Form 990 Series or our latest release for political organizations, Form 1120-POL.

Feel free to contact our support team of e-file experts at 704.839.2321 if you have any questions or need help with your e-filing experience. We’re here to assist you Monday through Friday from 9 a.m. to 6 p.m. EST or feel free to reach us 24/7 via email at support@ExpressTaxExempt.com.

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Why E-file with ExpressTaxExempt

The May 15 filing deadline for exempt organizations and private foundations is inching ever closer. E-filing 990 forms and extension is quickly becoming the best way for organizations and paid preparers to submit tax returns to the IRS.

If your organization still needs to file and you’re looking for an IRS-authorized, e-file provider, ExpressTaxExempt has you covered! With value-based pricing, nonprofit industry knowledge, and exclusive features, you’ll e-file confidently and securely this tax season.

Annual Tax Returns Made Simple
ExpressTaxExempt provides a user-friendly interface that guides you through the interview-style filing process with helpful tips. Information such as donation lists can be uploaded in bulk saving you a substantial amount of filing time. Schedules for Form 990, 990-EZ, and 990-PF are automatically generated based on your form interview answers. Our internal audit check ensures that every question has a response and amounts are balanced. Any mistakes we identify can be corrected before you transmit to the IRS.

Unique Filing Features
Transmit returns for multiple organizations from a single account or grant limited access to additional users for account management. Invite principal officers via a secure web portal to review completed tax form, add comments, make changes, or approve the return with an e-verify signature. Once you transmit your 990 form to the IRS, you’ll receive access to a printable copy of your return along with real-time email notification of your filing status.

Submit amended returns for approved 990 forms from previous tax years, or re-transmit rejected forms at no extra costs. Any tax return transmitted with ExpressTaxExempt is conveniently and securely stored within your account for easy access or reference later on.

Mobility & Accessibility
Small tax-exempt organizations can quickly and easily e-file using the free ExpressTaxExempt - Form 990 mobile app for iOS and Android devices. Large and mid-size exempt groups can also use the free Form 8868 mobile app to transmit extension forms and get approved for a 6-month extension of time almost instantly. You can use any desktop computer with internet access to sign in and manage your account which also includes continuing from where you last left off with the e-file process.

Support & Security
ExpressTaxExempt offers 100% US-based customer support for any questions about e-filing or your filing status. You also have the option to set up a session for in-depth, step-by-step filing assistance directly from your account with our Premium Support feature. Rest assured that your account is safe and secure with intensive, up-to-date web securities guaranteed to safeguard your private information. ExpressTaxExempt ensures that returns are sent directly to the IRS and nowhere else.

With all these benefits and features, why go through all the stress and time it takes to paper file? E-file your 2016 form 990 before the May 15 due date with IRS-authorized ExpressTaxExempt. Contact our support team of e-file experts at 704.839.2321 for any questions or help with your e-filing experience. We’re available Monday through Friday from 9 a.m. to 6 p.m. EST or reach us 24/7 via email with support@ExpressTaxExempt.com.

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How to File the Updated 8868 Extension Form

IRS Form 8868 is a tax extension form for exempt organizations and private foundations needing to increase their filing deadlines for 990 tax returns. The form separates into two sections - Part I and Part II - with each one offering a 3-month extension of time.

For the 2016 filing year, the IRS has eliminated the separate sections and now offers the 8868 form as a single filing that grants an automatic 6-month extension of time. Completing the new 2016 Form 8868 is similar as it was before; however, here are some IRS guidelines to follow when submitting an extension:


Basic Organization Details
Begin the form by adding essential information about your exempt organization or private foundation which includes the following:

• Organization Name
• Organization Address
• Employer Identification Number (EIN) or Social Security Number (SSN)

The IRS added the social security option for individuals filing the form. If you are filing on behalf of a nonprofit or private foundation, you should enter the federal employer identification number.


Return Codes/Books/Group Return
Enter the return code that represents that tax form you want to extend its filing time:

Form 990/990-EZ - 01 Form 990-T (corporation) - 07

Form 990-BL - 02 Form 1041-A - 08

Form 4720 (individual) - 03 Form 4720 (other than individual) - 09

Form 990-PF - 04 Form 5227 - 10

Form 990-T (sec. 401(a) or 408(a) trust) - 05 Form 6069 - 11

Form 990-T (trust other than above) - 06 Form 8870 - 12

You need to enter the full name of the person or officer that manages the organization’s books or financial statements along with the organization’s phone number, fax number, or both. You also have a choice to indicate whether the organization does not have an office or place of business within the United States.

If the extension is for a group return, the IRS requires you to enter the organization’s 4-digit Group Return Number (GEN). You can select if the extension is for the whole group or part of the group. If it’s for part of the group, you should attach a list of names and EINs of those organizations.

Tax Year Period
On Line 1, enter the extended due date which is six months after the initial filing deadline. For example, if your due date is June 15, then your extended date is December 15. Then, you can choose if the extension is for a calendar year or fiscal year. If it’s for a calendar year, then enter the numerical year, i.e. 2016. For fiscal tax years, enter the begin date followed by the end date, i.e. March 1, 2016, to February 28, 2017.

Important: The updated Form 8868 only applies to tax year 2016 and upcoming tax years in the future. If you happen to be filing an extension for 2015, you’ll need to revert to the 2-part form.

For organizations filing for a tax year period less than a full 12 months, you can indicate the reason why on Line 2.


Tax Liabilities
Line 3a, b, and c are for exempt organizations and private foundations with tax amounts owed to the IRS. Enter any tentative taxes minus nonrefundable credits on Line 3a. List refundable credits, estimated tax payments made, and any prior year overpayments as a credit on Line 3b. Subtract your total sum of 3b from 3a to get your “Balance due.” on Line 3c - that’s the amount you have to pay either through EFTPS or with a check or money order.

E-file Tax Extensions
E-filing Form 8868 to the IRS is the best way for both individuals and tax professionals. By using IRS-authorized, e-file services like ExpressTaxExempt or ExpressExtension, you can typically complete and transmit a 2016 8868 form in less than 10 minutes. The IRS processes e-filed forms much quicker than paper filing, so you’ll receive confirmation and a copy of your extension soon after transmitting. And with e-filing, you usually have until Midnight local time of the deadline date to submit your form.

For any questions about your organization’s information, tax year period, tax liabilities, or Form 8868 return codes, you can contact the IRS Tax-Exempt Hotline at 877.829.5500. If you’re interested in e-filing your extension form, you can reach ExpressTaxExempt at 704.839.2321 or via email with support@ExpressTaxExempt.com.

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What to Do For the May 15 Deadline

There’s about a month left before the May 15 filing deadline for tax-exempt organizations. The due date only applies to groups who operate on a calendar tax year which is from January 1 to December 31.

If this is your first time filing for a nonprofit or charity, or you just can’t remember exactly how to file a 990 form, here are a few tips to get you prepared.

Get Proper Documents Together
Before you even begin with the first page, you need to have the right information readily available or else you’ll waste time looking for papers rather than completing your return. Depending on which 990 form you need to file, you may have to report various details such as revenue and expense amounts, program services, a list of employees, financial statements, governance and more.

Some sections of a 990 tax return require additional information from a Schedule which you attach to your form. Schedules allow you to submit extra details about certain activities conducted by your organization - some schedules may apply to you such as Schedule B for contributions while others may not. For instance, Schedule H is only for hospitals and Schedule N is for terminated tax-exempt groups.

Types of 990 Forms
The IRS offers four main types of 990 forms - certain kinds serve as simpler options to the original 990 long form. Choosing the most appropriate return will save you precious amounts of filing time:

• Form 990-N (e-Postcard) - For organizations reporting gross receipts less than $50,000
• Form 990-EZ (Short Form) - For organizations reporting gross receipts less than $200,000 and total assets less than $500,000
• Form 990 (Long Form) - For organizations reporting gross receipts equal to or greater than $200,000 and total assets equal to or greater than $500,000
• Form 990-PF - For organizations identifying as an exempt private foundation, taxable private foundation, or a nonexempt charitable trust treated as a private foundation

Extension Form 8868
For any reason, if you are not ready for the May 15 deadline, you can extend your filing due date by submitting IRS Form 8868. The 8868 form allows you to increase the time you have to file a 2016 990 form by six months. You are responsible for submitting an extension request before your original due date - any later and the IRS will automatically reject it. There is no explanation required for filing an extension; however, if your organization owes any tax liabilities, it still must be paid by the original filing deadline.

Paper Filing vs. E-filing
Electronic filing is becoming the most preferred method for tax-exempt organizations and tax professionals to send 990 forms to the IRS. With paper filing, you’re sacrificing a significant amount of time to physically prepare financial statements, search and complete schedules, and mail the tax return without any confirmation from the IRS.

E-filing a 2016 Form 990 requires less time to process and is much easier to prepare. Transmitting a 990 tax return with an IRS-authorized, e-file provider - such as ExpressTaxExempt.com - offers more security than postal mailing, and you can receive instant confirmation of your filing status. The IRS also recommends exempt organizations to e-file rather than paper filing.

If you have any intensive tax questions regarding your organization’s revenue, expenses, or activities, you should contact your local tax professional or the IRS Tax-Exempt Hotline at 877.829.5500. For concerns or assistance with e-filing, you can reach out to ExpressTaxExempt at 704.839.2321 or with support@ExpressTaxExempt.com.

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Report Entire Contribution Lists in Minutes!

One of the most tedious tasks when filing Form 990 or a 990-EZ is entering list after list of donor information and their contribution amounts.

Many tax-exempt organizations receive hundreds of donations from individuals and groups each year and reporting them one by one consumes too much time.

IRS-authorized ExpressTaxExempt offers features which streamline your filing experience so you can e-file Form 990 as quickly and smoothly as possible. One of those features is our Bulk Upload option designed for exempt organizations who take in many donations throughout the tax year.

Upload Every Contribution at Once
Mid-size and large organizations have the option to upload their received donations by using the “Bulk Upload” button from the “Contributions, Gifts, Grants, and Similar Amounts Received” section.

By bulk uploading your organization’s contributions, you can continue filling out the rest of your tax return while ExpressTaxExempt loads all the donor information into your account.

Simple Steps to Upload
Uploading your contribution lists is quick and easy with these steps:

1. 1. Download pre-made excel template
2. 2. Enter your donation entries in the template and save
3. 3. Upload your saved excel file from your computer

You can also upload your own contribution spreadsheet if you have one already completed. Make sure your column headings match the required information that our application asks.

Schedule B Filings
ExpressTaxExempt automatically generates your Schedule B and pre-loads your contributions onto it. Remember, the IRS General Rule states to only list singular donations that are at least $5,000. And while you can enter or upload every contribution, our service will only place the entries that are $5,000 or greater as per IRS rule.

Contact our live US-based team of e-file professionals for any questions or need assistance with reporting contributions for your 2016 Form 990. We’re available at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or send an email 24/7 to support@ExpressTaxExempt.com.

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Invite Reviewers & Additional Users This Tax Season

The tax season is nearly upon us with the IRS filing deadline for exempt organizations just a little over a month away. Before the stress starts to settle in, ExpressTaxExempt offers you convenient ways to get some help directly from your tax-exempt group without hauling multiple form copies.

Manage Additional Users
Once you’ve entered your organization details, you can create user accounts for members or key employees with limited access to oversee your 2016 Form 990. Create your additional accounts with these steps:

1. 1. Click the “My Account” tab
2. 2. Click “Manage Additional Users.”
3. 3. Click the “Add Additional User” button
4. 4. Enter the user’s details (name, phone number, email) and select the type of access
5. 5. Click “Create User” button

Your additional user will receive an email containing a password which they can use along with their email address to log into your account.

Important: There are two types of access you can set for your users - “View” and “Edit.” “View” allows users to see everything in your account without the ability to make any changes. “Edit” can grant your users limited permissions such as paying and transmitting to the IRS or receiving notification emails.

Manage Reviewers and Approvers
After generating your Form 990 copy, you can invite board members or other officers to review your return before e-filing your 990 form to the IRS. These requests grant access to a secure web portal where members can add comments, make suggestions, or verify with electronic signatures. Send your invitations with these steps:

1. 1. Click the “My Account” tab
2. 2. Click “Manage Reviewers and Approvers.”
3. 3. Click the “Add User” button
4. 4. Enter user’s details and select the tax year of the 990 form
5. 5. Click “Share Return” button

Your recipients will get an email containing a link to the secure portal and a password to log in. Unlike additional users, your reviewers won’t have access to your account - they can only see the copy of your completed return.

If you have any questions about adding users or inviting reviewers from your account, contact our live US-based support team at 704.839.2321, or with support@ExpressTaxExempt.com. Eliminate tax season stress completely with our in-depth filing assistance by scheduling a Premium Support session before the May 15 deadline directly from your ExpressTaxExempt account.

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Politics and Charitable Nonprofits

Amidst our nation’s current political climate, the National Council of Nonprofits reports that nonpartisanship, an essential principle of charitable nonprofits, has fallen under scrutiny with our country’s leaders in Washington, D.C.

The organization is asking for all those concerned with the prosperity and efficiency of the nonprofit community to express support for increased protection by signing the Community Letter in Support of Nonpartisanship.

Nonpartisanship defines as being free from any party affiliation or designation. And though the IRS allows political participation from exempt organizations, there are strict regulations regarding lobbying and its expenditures. According to the National Council of Nonprofits, Congress is introducing bills that could repeal or substantially weaken current protections making charitable organizations more susceptible to endorse or oppose candidates running for an elected office.

The detrimental issue the Council points out is that being more impressionable towards political activities will redirect funding from an organization’s charitable mission to supporting election campaigns. Such legislation could also expose nonprofits and foundations to demands from candidates for political endorsements and contributions which will take funds from charitable work and eventually afflict the public trust of exempt organizations.

Ultimately, the Council states that the proposed changes are entirely unnecessary. They assure that there are already many legal ways for a nonprofit’s staff, board members, and volunteers to express their individual views on public policy issues. If you or any other nonprofit, charity, private foundation, or religious groups are interested in showing support or signing the Support of Nonpartisanship letter, you can visit GiveVoice.org or the Protecting Nonprofit Nonpartisanship website.

For any other questions or concerns about how lobbying and political activities can affect your organization, contact a local tax professional or reach out to the IRS Tax-Exempt Hotline at 877.829.5500.

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Revenue, Expenses, & Grants from Program Services

The IRS requires large and mid-size exempt organizations to describe three of their most major program services when reporting Form 990 or 990-EZ tax returns.

These services typically measure or rank by the total expenses spent by the organization. If a tax-exempt group has less than three program services, they can just describe the activities of each available service.

Descriptions of program services can include many variables such as how many clients the organization served, days of care provided, publications issued, or the number of sessions held. Along with stating the objective of the service, the IRS also needs to know all revenue, expense, and grant amounts associated with each program.

Revenue
Section 501(c)(3) and 501(c)(4) organizations are responsible for reporting any income coming directly from activities of each program service. Fees for services or sales from goods related to each activity are all considered revenue. These amounts should include the program service revenue listed on Part VIII, Column A, Line 2 of the 990 form; it can also contain other amounts from Part VIII, Line 1 through 3 such as related or exempt function revenue.

Important: Revenue should also include any unrelated business income from activities exploiting an exempt function - advertising in a journal would be an example. You shouldn’t combine any charitable contributions and grants as revenue coming from program services.

Expenses & Grants
For each program service listed on Part III, Line 4a through 4c, 501(c)(3) and 501(c)(4) organizations have to enter total expenses that you reported on Part IX, Column B, Line 25. And list the total grants and allocations within those expenses that are marked on Part IX, Column B, Line 3 through 11 of the 990 form.

Other Program Services
If you have more than three significant program services, you can continue to report on the Schedule O. The IRS won’t require a detailed description of these other services like it did the first three. But you are responsible for listing the total revenues and expenses - including grants - exactly how you did with your organization’s larger program services.

With IRS-authorized ExpressTaxExempt, organizations can easily enter information about their program services in minutes. Our 990 form e-file application also generates any additional services onto your Schedule O and allows you to enter revenue, expenses and grant amounts for each entry.

Speak with your local tax professional or advisor if you have any detailed questions about your organization’s program services. For any questions or assistance with reporting your program activities with our e-file service, contact our US-based customer support team at 704.839.2321 or email us with support@expresstaxexempt.com.

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Can Nonprofits Still Get Taxed?

When you hear the words “nonprofit” or “tax-exempt,” you typically think of a public charity or group doing some charitable work. And any money made, either through contributions or services, is exempt from taxes. That’s how you would think nonprofits work, but recently in the state of Washington, this concept went under scrutiny.

In 2015, a small animal rescue organization located in Eatonville, Washington, was contacted by a tax information specialist from the state’s Department of Revenue. The rescue group received notification that the sale of animals isn’t exempt from taxes - meaning that any adoption fees are subject to retail sales tax and Retailing Business and Occupation (B&O) tax. Based on this information, the animal rescue realized they would have to pay nearly $20,000 in back taxes.

According to Washington’s Department of Revenue, nonprofit groups in the state get taxed like any other business; they are also responsible for B&O tax on revenues from business activities, sales tax on goods and services purchased as consumers, and they must charge a sales tax for items and services offered. In this particular situation, the only exemption is for a government or quasi-government group like humane societies providing similar services.

Other private animal shelters and advocates have spoken how animal adoptions are not sales but require fees for pet licensing; they’ve also exclaimed how exceptions for government-sponsored animal shelters are double standards. Back in Eatonville, the founder of the small animal rescue explained that revenue from adoption fees goes directly to providing veterinary and dental services for animals in their care. And the organization is maintained entirely by volunteers.

While it is quite possible for nonprofit organizations to have taxes imposed, under normal circumstances, it depends on how the revenue gets generated. If a tax-exempt group makes money from activities or services that have nothing to do with their exempt purpose, it gets taxed. Likewise, revenue spent on anything non-related to the exempt purpose gets taxed. And you also have your normal wage taxes for any paid employees or officers.

The Washington state Department of Revenue has since then vetoed their decision to impose retail taxes on adoption fees; however, this resolution has remained inconsistent throughout the state. In 2016, a bill was introduced in the Senate suggesting tax improvements and licensing laws governed by the Department of Revenue. The bill presents a formalized policy prohibiting retail sales tax from animal adoption fees charged by nonprofit animal organizations.

If you have questions or concerns about taxable revenue generated by your nonprofit or charity, please speak with a local tax professional - you may have to file additional returns along with your IRS 990 form to correctly report taxed income.

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How to File a Schedule F for Foreign Activities

Any exempt organization with activities conducted outside the United States need to report information about those international actions on their IRS Form 990.

Activities can include grants and other assistance, program-related investments, fundraising activities, program services, and more.

Reporting this type of information is done using Schedule F and is for various geographic locations like Antarctica, Central America and the Caribbean, East Asia and the Pacific, Europe, and much more.

Here are some helpful guidelines to follow from the IRS when filing a Schedule F:

Part I - General Information on Activities Outside the United States
The first section of Schedule F is for organizations with aggregate revenues or expenses greater than $10,000 from grantmaking, fundraising, business, investment, or program services outside of the United States. The IRS doesn't require any expenditure from services provided in U.S. for recipients inside and outside the U.S.

For Line 1, indicate whether the organization maintains records to substantiate the following:

• The monetary value of its grants and other assistance
• The recipients’ eligibility for grants or assistance
• The selection criteria used to award grants or assistance

Responses to Line 2 will go on Part V of the Schedule F. You should describe the organization’s procedures for monitoring the use of grants and assistance outside of the U.S. - this can include details from periodic reports and accountings, field investigations, or third-party audits.

Line 3 requires you to enter details for each type of activity conducted any time during the filling year for each region. If the organization has many activities per area, list each one separately for the same location name. Report any investments by regions as well; however, they should be separate from other activities listed in the same area. And you can list all investments from a particular region as a single entry.

It is not necessary to report any foreign investments indirectly held through a pass-through entity in the U.S. because the entity is not physically in a foreign location. You also won’t need to list any investments from entities located overseas that trade on a U.S. stock exchange.

Important: Listing funds transferred to a non-interest bearing account outside of the United States for program services is not necessary for Line 3; however, once those funds are used, the IRS requires you to list them on Line 3, Column F.

Complete the chart for Line 3 as follows

• Column A - List each region in which your organization conducts its foreign activity
• Column B - List the number of offices in each region
• Column C - List the number of employees, agents, and independent contractors in each region
• Column D - List the type of activity conducted in the region (i.e. fundraising, program services, etc.)
• Column E - Give a description of the particular type of service for any program services listed in Column D
• Column F - List total expenditures and investments in each region

With Lines 3a through 3c for Column B, report the total number of offices in foreign locations maintained by the organization during the tax year - don’t count any one office more than once. You’ll also enter the total number of employees and the overall sum of expenditures and investments on Lines 3a through 3c for their respective columns.

Part II - Grants and Other Assistance to Organizations or Entities Outside the United States
Exempt organizations with any recipients outside of the U.S. that have received grants or assistance of at least $5,000 need to be reported in this section. On Line 1, you need to list those recipients in the chart provided. Enter each organization or entity on separate lines. If you require more space for additional beneficiaries, you can attach duplicate copies as needed.

In this section, list cash or noncash grants and assistance based on the accounting method from your organization’s financial statements - you’ll need to describe this process later on in Part V. You should also report grants no matter the source of the funds or whether the organization chose the recipient.

Important: Completing Columns A or B in the chart isn’t necessary.

Finish the rest of the chart for Line 1 as follows

• Column C - Enter the region where the principal foreign office of the recipient organization is or where grant funds are getting used
• Column D - Describe the purpose of grant funds with specific terms like general support, school, construction, or medical supplies rather than broad words like educational or religious
• Column E - Enter the total dollar amount of cash grants, in U.S. dollars, for each recipient
• Column F - Describe how your organization disburses cash for each recipient (i.e. cash payment, check, money transfer, etc.)
• Column G - Enter the Fair Market Value of noncash properties in U.S. dollars
• Column H - Enter a description for any noncash goods or assistance listed
• Column I - Describe the method of valuation for noncash properties

On Line 2, report the total number of recipients from your list on Line 1 that is either recognized as a charity by the foreign country, recognized as tax-exempt by the IRS, or has provided a section 501(c)(3) equivalency letter. With Line 3, enter the total number recipients that are not classified as described in Line 2.

Part III - Grants and Other Assistance to Individuals Outside the United States
Similar to Part II, this section is for exempt organizations who have given at least $5,000 in grants and assistance directly to foreign individuals or foreign groups for the benefit of a particular foreign individual.

You need to complete the chart in Part III the same way you did for Part II, Line 1. Be aware that for Part III, Column A, you’re going to use the same terms that you used for Part II, Line 1, Column D. The IRS also needs an explanation in Part V for any estimated numbers you come up with for Part III, Column C.

Part IV - Foreign Forms
Any exempt organization filing a Schedule F must complete Part IV by answering each question from Line 1 to Line 6. It could be possible to answer each question as “No,” if applicable. But for any question answered “Yes,” the IRS requires you to the file the additional form listed with the question.

Part V - Supplemental Information
The final section within Schedule F is for you to provide detailed explanations for the following parts you answered earlier:

• Part I, Line 2 - Methods for monitoring the use of your organization’s grants and assistance outside the U.S.
• Part I, Line 3, Column F - Methods used for accounting expenditures on the organization’s financial statements
• Part II, Line 1 and Part III - Methods used for accounting cash grants and noncash assistance on the organization’s financial statements
• Part III, Column C - Methods used to estimate the number of recipients

You can also supply any other explanations or descriptions as needed, but for anything written in Part V, you should write out the corresponding part and line of the schedule. For any tax-intensive questions regarding your organization’s activities outside of the U.S., we recommend speaking with a certified professional or contacting the IRS directly at 877.829.5500.

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