What is Schedule G? How Does It Work?

Just navigating the intricacies of IRS Form 990 can be overwhelming, especially when it comes to Schedule G. This necessary section provides detailed insights into your nonprofit organization’s fundraising activities, events, and gaming operations, helping you ensure compliance with reporting requirements. It’s crucial for you to understand how to accurately track and report your gross receipts, expenses, and professional fundraising services to maintain transparency and uphold your organization’s credibility. In this post, we will break down what Schedule G entails and how it works, guiding you through the necessary steps for successful completion.

Understanding IRS Form 990

While navigating the complexities of nonprofit finance, it’s important to understand IRS Form 990, which provides the federal government with an overview of your organization’s financial status, operations, and compliance with tax regulations. This annual report delivers vital information about your mission, programs, and financial activities, ensuring transparency and accountability in nonprofit operations.

Purpose of Form 990

With Form 990, you provide crucial financial data that helps the IRS ensure compliance with tax-exempt status requirements. It functions as a financial report that outlines your organization’s income, expenses, and assets while also showcasing how your activities align with your charitable mission.

Who Must File Form 990

Form 990 is required for organizations exempt from income tax under Section 501(c)(3) and those with gross receipts typically exceeding $200,000 or total assets exceeding $500,000. This requirement applies even if your organization engages in limited activities throughout the year.

Understanding the criteria for filing Form 990 is vital for compliance. If your organization has gross receipts over $200,000 or total assets above $500,000, completing this form is mandatory. Even smaller organizations, like those with under $200,000 in annual receipts, must submit a shorter version, Form 990-EZ, or the e-postcard Form 990-N, depending on their specific financial situation.

Overview of Schedule G

File Schedule G as part of IRS Form 990 to disclose your organization’s fundraising efforts and gaming activities comprehensively. This schedule provides important information on fundraising events, professional fundraising services hired, and all income from gaming activities, ensuring transparency regarding your fundraising ventures.

Purpose-driven, Schedule G allows you to report detailed information on all fundraising activities, including events, contributions, and associated expenses. For example, if your organization receives over $15,000 in gross receipts from fundraising events during the fiscal year, you must track and report each significant event separately, helping stakeholders understand your organization’s financial health and commitment to transparency.

Filing Requirements

Requirements for completing Schedule G hinge on your organization’s financial activities, particularly fundraising and gaming efforts. If your organization pays for professional fundraising services or earns significant revenue from fundraising events or gaming activities exceeding specified thresholds, you are obligated to complete Schedule G.

Schedule G has specific filing thresholds: you must report expenses over $15,000 for professional fundraising services, gross receipts over $15,000 from fundraising events, or gross income exceeding $15,000 from gaming activities. Awareness of these requirements ensures you meet IRS guidelines and avoid potential penalties, which is crucial for maintaining your organization’s tax-exempt status.

Part I: Fundraising Activities

Once again, Schedule G of the IRS Form 990 includes a section dedicated to fundraising activities, enabling not-for-profit organizations to report their efforts in raising funds through events and professional services. This part is crucial for organizations that exceed $15,000 in expenses for outside fundraising services, ensuring transparency and compliance with IRS requirements.

Requirements for Completion

Part I of Schedule G must be completed if your organization is required to file Form 990 and has reported over $15,000 in expenses related to outside fundraising services. Importantly, 990-EZ filers are exempt from this requirement, so understanding your filing obligations is key to determining compliance.

Information to Report

Activities that you engage in to solicit funds must be reported in detail, highlighting not only the types of fundraising strategies used but also the providers of any outside professional fundraising services.

Information pertaining to the nature of your fundraising efforts—including phone solicitations, mail campaigns, and special events—needs to be meticulously documented. Additionally, you should include the names and details of any outside fundraising service providers to maintain clarity and compliance with IRS standards.

Tracking Fundraising Activities

With the requirement to report over $15,000 in expenses, accurately tracking your organization’s fundraising activities is important. This means maintaining organized records of each fundraising effort you undertake.

To ensure thorough tracking, create a systematic approach to record the gross receipts and associated expenses for each fundraising event. You can utilize spreadsheets or fundraising software to log details about cash prizes, venue costs, food, and entertainment expenses, facilitating accurate reporting on Schedule G.

Part II: Fundraising Events

Despite the complexities of fundraising regulations, understanding Part II of Schedule G is crucial for not-for-profit organizations. This section provides a comprehensive overview of your fundraising events, outlining the financial transactions that occur during these initiatives.

Definition of Fundraising Events

Definition: Fundraising events are organized activities aimed at generating income for your not-for-profit organization. These can include benefit dinners, auctions, and other special events designed to solicit donations from attendees.

Reporting Requirements for Events

Definition: To comply with IRS requirements, you must report gross receipts from each fundraising event on Schedule G. Specifically, you need to track events that yield more than $15,000 in gross receipts throughout the fiscal year.

Another key point to consider is that you must report each event individually if it generates more than $5,000 in gross receipts. Along with the total receipts, you need to detail the contributions included in those receipts and all event-related expenses, such as cash and non-cash prizes, facility rental costs, and catering.

Aggregating Fundraising Event Data

Event aggregation is necessary when your organization conducts more than three fundraising events during the fiscal year. In this case, only the two events with the largest gross receipts need to be reported individually, while smaller events are combined under “Other Events.”

Fundraising event aggregation allows you to streamline your reporting process. By focusing on the two most successful events, you can highlight the key contributors to your fundraising efforts while simplifying the data submission for the remaining events that fall below the threshold.

Detailed Reporting for Events

Many nonprofit organizations need to maintain detailed records of their fundraising events as part of the reporting requirements outlined in Schedule G. You are required to complete this section if your organization reports more than $15,000 in gross receipts from these events within the fiscal year. This detailed information helps ensure transparency and accountability in your fundraising practices.

Types of Fundraising Events

Many different types of fundraising events can be organized to raise funds for your nonprofit. These can include:

• Benefit dinners
• Auctions
• Charity walks/runs
• Concerts or performances
• Online crowdfunding campaigns

Recognizing the various formats available can optimize your fundraising strategy and engage your audience effectively.

Gross Receipts Reporting

One vital aspect of Schedule G is accurately reporting the gross receipts from each fundraising event. You must track the total amount collected from ticket sales, donations, and any other income generated during the event. Each event that generates over $5,000 needs to be reported individually to provide clarity on your fundraising success.

Reporting the gross receipts not only fulfills IRS requirements but also offers you valuable insights into which events were most effective. This data can help improve your fundraising strategy for future events and make informed decisions about resource allocation.

Expense Reporting for Each Event

One of the critical requirements for Schedule G is reporting the expenses incurred during your fundraising events. You need to detail costs associated with cash prizes, venue rental, food, entertainment, and any other direct expenses that contributed to the event’s overall cost.

Expense tracking is crucial for evaluating the financial performance of your events. By documenting the expenses alongside gross receipts, you can determine your net income from each fundraiser, enabling better planning and resource management for future fundraising efforts.

Part III: Gaming Activities

Unlike other fundraising methods, gaming activities present unique reporting requirements under Schedule G of Form 990. If your organization generates more than $15,000 in gross income from gaming, you are obligated to report these activities separately to ensure compliance with IRS regulations.

Requirements for Gaming Reporting

Any organization that receives over $15,000 in gross income from gaming must track and report each type of gaming activity separately. This includes detailed expense reporting for cash prizes, non-cash prizes, and other direct costs associated with the gaming activities.

Types of Gaming Activities

Any gaming activities conducted should be appropriately categorized. Common types include:

• Bingo games
• Casino nights
• Video poker
• Raffles
• Sweeps and other lottery-type games

Activities such as bingo, casino nights, and raffles not only contribute to your fundraising goals but also come with specific reporting obligations. Understanding the IRS’s guidelines will help you accurately report and maximize your organization’s efforts. Any funds raised through these activities must be documented in detail to separate them from regular donations.

Compliance Considerations

For not-for-profit organizations, adhering to the reporting requirements specified in Schedule G is crucial to maintaining compliance with IRS regulations. Proper completion of the schedule ensures that your organization accurately discloses fundraising expenses and gaming activities, which aids in transparency and trust with donors and stakeholders. Failure to meet these requirements can potentially lead to penalties or loss of tax-exempt status.

Adhering to State and Local Regulations

With gaming activities often regulated by state and local authorities, it’s important for you to familiarize yourself with these regulations before engaging in such activities. This compliance helps mitigate legal risks and ensures that your fundraising efforts align with local laws, which may vary widely across jurisdictions.

Common Mistakes to Avoid

All too often, organizations encounter pitfalls when completing Schedule G, which can lead to potential issues with the IRS. To ensure accurate reporting, it’s vital to be aware of common mistakes and take proactive steps to avoid them. Attention to detail will safeguard your organization against unnecessary scrutiny and penalties.

Incomplete Reporting

An incomplete reporting of fundraising activities and events can trigger compliance issues for your organization. Ensure that every fundraising event generating over $15,000 in gross receipts is documented thoroughly, including receipts, contributions, and expenses. This diligence is necessary to providing a clear picture of your fundraising efforts to the IRS.

Misclassification of Events

Any misclassification of events can lead to inaccurate reporting on Schedule G. It’s crucial to correctly categorize each fundraising event separately, especially when some events generate more than $5,000 in gross receipts. Accurate classification will ensure that you are meeting IRS requirements and provide a transparent view of your organization’s fundraising activities.

Common examples of misclassification may include failing to distinguish between different types of fundraising events or inaccurately reporting gaming activities as regular fundraising efforts. Properly classifying your events not only reflects accuracy in your reporting but also aids in compliance with federal regulations. Take the time to track your events clearly to avoid these mistakes.

Failing to Seek Professional Advice

The failure to seek professional advice can result in misunderstandings about Schedule G’s complexities, which may lead to costly errors. Consulting with a tax advisor familiar with nonprofit regulations can provide the insights necessary for accurate and compliant reporting.

A trusted tax advisor can help you navigate intricacies such as determining whether gaming activities result in unrelated business taxable income. This expertise is invaluable in ensuring your organization adheres to all reporting requirements, ultimately helping to avoid penalties and safeguard your nonprofit’s reputation.

Summing up

Schedule G of IRS Form 990 is essential for nonprofits to report their fundraising activities, events, and gaming operations. If your organization exceeds certain financial thresholds, you must carefully track and report these details. Meeting these requirements ensures IRS compliance and maintains transparency, building trust with donors and stakeholders.

Need Help With Back Taxes?

Contact a tax specialist today to explore how to reduce, resolve, or eliminate your back taxes with the IRS Fresh Start Program.

For more information or assistance, click here or call us directly at (800) 607-7565 for immediate support.