By: Richard Ruvelson (principal at GHJ)

For those who were able to attend the GHJ Annual Nonprofit Accounting and Tax Update Workshop last week, you heard me talk about the Form 990, as well as other developments, and received a copy of this blog in your folder. For anyone who wasn’t able to attend the workshop, be sure to read below for a quick refresher.

The Center for Competitive Politics (CCP), an advocacy group, suffered another setback in its bid to keep its donor list, Form 990, Schedule B and Schedule of Contributors secret. It is well established that certain donor information, including donor names and the associated amount of their gift(s) is not open to public inspection with Form 990. The State of California, however, requires that charitable organizations annually submit a complete Form 990, including a complete Schedule B to the Registry of Charitable Trusts on an annual basis, as an attachment to Form RRF-1, Annual Registration Renewal Fee Report to Attorney General of California.

CCP sought a preliminary injunction against California’s Attorney General Kamala Harris to deny her office’s ability to demand the otherwise confidential donor information (except from the IRS). In December of 2014, CCP requested a preliminary injunction in the U.S. District Court, Central District. CCP asserted that disclosure of the names to the Attorney General would have a chilling effect on the donor’s freedom of speech, and that the Attorney General’s demand for the donor information was preempted by federal tax law, under which Schedule B information is confidential. Harris’ office argued that the information was gathered for use in investigating charitable misconduct and potential fraudulent activities of donors. The preliminary injunction was not granted by the District Court, and that decision was subsequently upheld by both the U.S. Court of Appeals for the Ninth Circuit and U.S. Supreme court Justice Anthony Kennedy who turned down an emergency appeal by CCP.

While the CCP case involves well known political interests and interesting constitutional questions, it provides us with a good opportunity to remember some basics with respect to Form 990 public inspection, as well as providing Form 990 to board members prior to filing.

  • If Schedule B is required to be filed as part of Form 990, required donor names and addresses must be included on the form: if a donor’s gift(s) must be reported, they must be reported and the word “anonymous” is not sufficient.
  • Schedule B is not required to be provided when providing Form 990 upon request.
  • When filing Form 990 with Form RRF-1, a complete Form 990, including donor information, must be attached.
  • When Form 990 is provided for board review prior to filing, the complete Schedule B must be included in order to answer “Yes” to question 11a of Form 990, Part VI.

In order to determine whether donor information must be provided on Form 990 Schedule B, the charitable organization must determine whether the General Rule or the Special Rules apply.

General Rule:

  • For charitable organization filing Form 990, 990-EZ or 990-PF that received, during the year, contributions totaling $5,000 or more (in money or property) from any one contributor complete Parts I and II. See instructions for determining a contributor's total contributions.

Special Rules:

  • For an organization described in section 501(c)(3) filing Form 990 or 990-EZ that met the 331/3 percent support test of the regulations under sections 509(a)(1) and 170(b)(1)(A)(vi), that checked Schedule A (Form 990 or 990-EZ), Part II, line 13, 16a, or 16b, and that received from any one contributor during the year total contributions of the greater of (1) $5,000 or (2) two percent of the amount on (i) Form 990, Part VIII, line 1h or (ii) Form 990-EZ, line 1 complete Parts I and II.
  • For an organization described in section 501(c)(7), (8) or (10) filing Form 990 or 990-EZ that received from any one contributor during the year contributions exclusively for religious, charitable, etc., purposes but no such contributions totaled more than $1,000. If this box is checked, enter here the total contributions that were received during the year for an exclusively religious, charitable, etc., purpose. Do not complete any of the parts unless the General Rule applies to this organization because it received nonexclusively religious, charitable, etc., contributions totaling $5,000 or more during the year.

Note that an organization that is not covered by the General Rule and/or the Special Rules does not file Schedule B (Form 990, 990-EZ or 990-PF), but it must answer “No” on Part IV, line 2, of its Form 990 or check the box on line H of its Form 990-EZ or on its Form 990-PF, Part I, line 2, to certify that it does not meet the filing requirements of Schedule B (Form 990, 990-EZ or 990-PF).

I receive questions regarding at least one of the issues listed above on a regular basis, and the controversy over CCP and the conclusion of the May 15 filing season provides a good opportunity to update you on both big picture and day-to-day concerns in the same post.