Further Instructions for IRS Form 1023

Part I. Identification of Applicant 
Part II. Organizational Structure 
Part III. Required Provisions in Your Organizing Document 
Part IV. Your Activities 
Part V. Compensation and Other Financial Arrangements 
Part VI. Financial Data 
Part VII. Foundation Classification 
Part VIII. Effective Date 
Part IX. Annual Filing Requirement 
Part X. Signature 
Schedule A. Churches 
Schedule B. Schools, Colleges, and Universities 
Schedule C. Hospitals and Medical Research Organizations 
Schedule D. Section 509(a)(3) Supporting Organizations 
Schedule E. Effective Date 
Schedule F. Low-Income Housing 
Schedule G. Successors to Other Organizations 
Schedule H. Organizations Providing Scholarships, Fellowships, Educational Loans, or Other Educational Grants to Individuals and Private Foundations Requesting Advance Approval of Individual Grant Procedures [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”part1″ css=”.vc_custom_1582307562959{padding-top: 40px !important;}”][vc_column][vc_column_text]Part I. Identification of Applicant 

Line la. Enter your complete name exactly as it appears in your organizing document, including amendments. 

Line 1 b. If you have an “in care of” name, enter it here; otherwise, leave this space blank. 

Line 1 c. Enter your complete address where all correspondence will be sent. If mail isnt delivered to your street address and you have a P.O. box, list your P.O. box information instead of your street address. 

For a foreign address, enter your province or state and foreign postal code where indicated. 

Line 2. Employer Identification Number (EIN). You must have your own EIN. Enter the 9-digit EIN the IRS assigned to you. If you dont have an EIN, you must apply for one before submitting your application. You can find out how to apply for an EIN by visiting IRS.gov and search for “apply for an EIN.” You may apply for an EIN online or by fax or mail. International applicants may call 267-941-1099 (toll call). 

Dont apply for an EIN more than once. If youre unsure of your EIN or whether you have onecall 877-829-5500 for assistance. 

Line 3. Month tax year ends. Select the month your tax year (annual accounting period) ends. Your tax year (annual accounting period) is the 12-month period on which your annual financial records are based. 

Check your bylaws or other rules of operation for consistency with the tax year (annual accounting period) you enter here. 

Line 4. Person to contact. Enter the name and title of the person you want us to contact if we need more information. The person to contact may be an officer, director, trustee, or other individual who is permitted to speak with us according to your bylaws or other rules of operation. Your person to contact may also be an authorized representative, such as an attorney, certified public accountant, or enrolled agent, for whom youre submitting a completed Form 2848 with the Form 1023. 

Line 5. Provide a daytime telephone number for the contact listed on line 4. 

Line 6. You may provide a fax number for the contact listed on line 4. 

Line 7. Pay.gov will populate this field with the current user fee for filing Form 1023. 

Line 8. Enter your complete website address if you have one. Also, list any websites maintained on your behalf. The information on your website should be consistent with the information in your Form 1023. 

Line 9. Officers, directors, and trustees. Enter the full names, titles, and mailing addresses of your officers, directors, and/or trustees. You may use the organizations address for mailing. If you have more than five officers, directors, or trustees, check the box provided to add more officer, director, and/or trustee information. 

The person who is signing Form 1023 must be listed within the first five entries of line 9. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”PartII” css=”.vc_custom_1582307570761{padding-top: 40px !important;}”][vc_column][vc_column_text]Part II. Organizational Structure 

You must be a corporation, limited liability company, unincorporated association, or trust to be tax exempt under section 501(c)(3). Sole proprietorships, partnerships, or loosely affiliated groups of individuals arent eligible. 

Line 1. Type of organization and copy of organizing document. Select your type of organization, and before submitting the form, upload a copy of your organizing document (including any amendments) as part of the required attachment. 

Corporation. corporation is an entity organized under a federal or state statute, or a statue of federally recognized Indian tribal or Alaskan native government. 

Copy of organizing document (articles of incorporation and any amendments). A corporationorganizing document is its “articles of incorporation. ” If you formed under state statute, your articles of incorporation (and any amendments) must show certification of filing. This means your articles show evidence that on a specific date they were filed with and approved by an appropriate state authority. The document must be an exact copy of what is on file with your state. 

If you dont have a copy of your articles of incorporation showing evidence of having been filed and approved by an appropriate state official, you may submit a substitute copy of your articles of incorporation. This substitute copy may be handwritten, typed, printed, or otherwise reproduced. It must be accompanied by a declaration, signed by an officer authorized to sign for you, that it is a complete and correct copy of the articles of incorporation and that it contains all the powers, principles, purposes, functions, and other provisions by which you currently govern yourself. 

Limited liability company. limited liability company (LLC) that files its own exemption application is treated as a corporation rather than a partnership. 

Copy of organizing document (articles of organization and operating agreement (if adopted) and any amendments). Instead of articles of organization, an LLCs organizing document is its state-approved “articles of organization.” If it has adopted an “operating agreement,” then this document is also part of its organizing document. If you formed under state statute, your articles of organization (and any amendments) must show certificate of filing. This means your articles show evidence that on a specific date they were filed with and approved by an appropriate state authority. The document must be an exact copy of what is on file with your state. If you dont have a copy of your articles of organization showing evidence of having been filed and approved by an appropriate state official, you may submit a substitute copy of your articles of organization. This substitute copy may be handwritten, typed, printed, or otherwise reproduced. It must be accompanied by a declaration, signed by an officer authorized to sign for you, that it is a complete and correct copy of the articles of organization and that it contains all the powers, principles, purposes, functions, and other provisions by which you currently govern yourself. 

If you are an LLC and want to be treated as a disregarded entity by a tax-exempt member, dont file an exemption application. 

Unincorporated association. An unincorporated association formed under state law must have at least two members who have signed a written document that creates an entity with a specifically defined purpose. 

Copy of organizing document (articles of association or constitution and any amendments). Your organizing document must include the name of the organization, its purpose, the date the document was adopted, and the signatures of at least two individuals. If your copy doesnt contain the proper signatures and date of adoption, you may submit a written declaration that states your copy is a complete and accurate copy of the signed and dated original. Your declaration should clearly indicate the original date of adoption. 

Bylaws may be considered an organizing document only if they include the required elements listed above. 

Trust. trust may be formed by a trust agreement or declaration of trust. A trust may also be formed through a will. Generally, a trust must be funded with property, such as money, real estate, or personal property. 

Copy of organizing document (trust agreement/declaration of trust or will and any amendments). Your trust agreement (and any amendments) must be signed by at least one trustee. If your trust agreement copy isnt signed, you may submit a written declaration that states your copy is a complete and accurate copy of the signed and dated original. Your declaration should clearly indicate the original date that it was signed. For trusts created by a will, include a copy of the death certificate or a statement indicating the date of death, and a copy of the relevant portions of the will. 

If your trust agreement continues to provide for distributions for non-charitable interestsyou wont qualify for tax-exempt status. 

Line 2. Formation date. The date you enter should be consistent with your organizing document. 

  • If youre a corporation, enter the date that your articles of incorporation were filed and approved by the appropriate authority.
  • If youre an LLC, enter the date that the appropriate authority filed your articles of organization orotherorganizing document. 
  • If youre an unincorporated association, enter the date that your organizing document was adopted by the signatures of at least two individuals.
  • If youre a trust (other than a trust formed by a will), enter the date your trust was funded. If your trust agreement provided for any non-charitable interests, enter the date that non-charitable interests expired. If you were formed by a will, enter the date of death or the date any non-charitable interests expired.

Line 3. State of formation. Enter the jurisdiction (for instance, the state or the federally recognized tribal government) under the laws of which you were incorporated or otherwise formed. This may not be the place in which youre physically located. For example, if youre physically located in New York, but incorporated under Massachusetts law, enter Massachusetts. 

For purposes of completing this application, youre formed under the laws of a foreign country if youre not formed under the laws of the United States, its territories and possessions, federally recognized Indian tribal or Alaska native governments, or the District of Columbia. 

Line 4. “Bylaws” are generally the internal rules and regulations of an organization. If you have bylaws, upload a current copy (including any amendments). Bylaws dont need to be signed unless they are your organizing document as described in the instructions for line 1 above. 

Line 5. Successor organization. You are a “successor” if you: 

  • Took over activities previously conducted by another organization, Took over 25% or more of the fair market value of the net assets of another organization, or
  • Were established upon the conversion of an organization from for-profit to non-profit status.

If youre a successor organization, complete Schedule G, Successors to Other Organizations. 

Your predecessor organization may have been either a tax-exempt or non-exempt organization. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”PartIII” css=”.vc_custom_1582307579237{padding-top: 40px !important;}”][vc_column][vc_column_text]Part III. Required Provisions in Your Organizing Document 

Line 1. Purpose clause. Your organizing document must limit your purposes to those described in section 501 (c)(3). Those purposes are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. 

The generally accepted legal definition of “charitable” includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency. Therefore, the phrase “relief of the poor”’ in your organizing document properly limits your purposes. 

Limiting your purposes by reference to section 501 (c)(3) generally will be sufficient to meet the organizational test under section 501 (c)(3). Your organizing document may also sufficiently limit your purpose by reference to a specific charitable purpose such as “relief of the elderly within the meaning of section 501(c)(3).” 

  • However, purposes listed in your organizing document broader than those listed in section 501 (c)(3) may cause you to fail the organizational test. In that case, you will need to amend your organizing document before applying. A reference to section 501 (c)(3) wontensure that your purposes are limited to those described in section 501 (c)(3) if other provisions describing your purposes include one or more non-exempt purposes. The following is an example of an acceptable purpose clause.

The organization is organized exclusively for charitable, religious, educational, and scientific purposes under section 501(c)(3) of the Internal Revenue Code, or corresponding sections of any future federal tax code.See Pub. 557 for further information and examples of how to limit your purposes.
Line 2. Dissolution clause. Your organizing document must provide for the permanent dedication of your assets to a section 501 (c)(3) purpose. This means that if you dissolve your organization in the future, your assets must be distributed for an exempt purpose described in section 501(c)(3), or to the federal government, or to a state or local government, for a public purpose. In certain states, you may rely on state law to establish the permanent dedication of assets for exempt purposes. This is based on Rev. Proc. 82-2,1982-1 C.B. 367. For additional information, search “Operation of state law” at IRS.gov.
Foreign organizations may be able to rely upon the applicable laws of their jurisdiction in a similar manner. If relying on a foreign law, you must provide a copy of the applicable law with an English translation.
Naming a specific organization to receive your assets upon dissolution will be acceptable only if your organizing document requires that the specific organization to be exempt under section 501 (c)(3) at the time your dissolution takes place and provides for a qualified alternative recipient if the named organization isnt exempt under section 501(c)(3) at that time.
If your organizing document states that your assets would be distributed to members or private individuals or for any purpose other than those provided in section 501 (c)(3), you must amend your organizing document to remove such statements.
The following is an example of an acceptable dissolution clause. Upon the dissolution of this organization, assets shall be distributed for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose.
See Pub. 557 for further information and examples of acceptable language for dedication of assets in your organizing document.[/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”PartIV” css=”.vc_custom_1582307585295{padding-top: 40px !important;}”][vc_column][vc_column_text]Part IV. Your Activities

Reminder
Answer all questions in this part as they pertain to your past, present, and future activities.
Line 1. Describe completely and in detail your past, present, and planned activities. Dont refer to or repeat the purposes in your organizing document or speculate about potential future programs. Your narrative description of activities should be thorough and accurate because we determine whether you qualify for section 501 (c)(3) exempt status based on the information in your application. You should describe either actual or planned activities. For example, if you plan to further educational purposes by operating an afterschool homework club, you would describe that activity rather than cite that you will further educational purposes. If you were also contemplating offering scholarships in the future, but currently have no plans to do so, then the scholarship activity would be speculative, and you should not describe it.
Some organizations (such as credit counseling organizations (see Part IV, line 8), childcare organizations (see Part IV, line 12), agricultural research organizations (see Part VII, line 1), or cooperative hospital service organizations (see Schedule C)) must meet specific operational requirements to qualify for exemption under section 501 (c)(3). If youre such an organization, be certain to include an explanation in your activity description of how activities you conduct (or dont conduct, if the specific operational requirement limits permissible activities) satisfy those specific operational requirements.
For each past, present, or planned activity, include information that answers the following questions. 

  • What is the activity?
  • Who conducts the activity?
  • Where is the activity conducted?
  • What percentage of your total time is allocated to the activity? (Combined time percentages should add up to 100%.)
  • How is the activity funded (for example, donations, fees, etc.) and what percentage of your overall expenses is allocable to this activity?
  • How does the activity further your exempt purposes?

Line 2. National Taxonomy of Exempt Entities (NTEE) code. An NTEE code is a three-character series of letters and numbers that generally describes a type of organization. Enter the code that best describes your organization from the list of NTEE codes, located in Appendix D. For more information and more detailed definitions of these codes developed by the National Center for Charitable Statistics (NCCS), visit the Urban Institute NCCS website at www.nccs.urban.org. 

NTEE codes are also used for purposes other than identification of organizations described in section 501 (3)(c). Therefore, all codes in the list don’t necessarily correspond to a section 501(c)(3) purpose. 

Line 3. If programs are limited to specific individuals, describe how you select or identify those individuals. If programs are available only for members, describe membership criteria, any membership dues, any different membership levels, and the benefit each membership level receives. 

Line 4. Describe any business or family relationship between individuals who receive goods, services, or funds through your programs and any officers, directors, trustees, or highest compensated employees or independent contractors. 

For purposes of this form, “highest compensated” employees or independent contractors are persons to whom you pay over $100,000 of compensation, including compensation from related organizations. 

Line 5. You participate in a political campaign if you promote or oppose the candidacy of an individual for public office. Candidate debates and nonpartisan voter education and registration may be permitted. See Rev. Rul. 2007-41, 2007-25 I.R.B. 1421 at IRS.aov/irb/ 2007-25 I.R.B. 1421 and Pub. 1828 for more information and examples. 

Organizations described in section 501(c)(3) are prohibited from supporting or opposing candidates for public office in any political campaign. If you answer “Yes,” you arent qualified for tax exemption under section 501(c)(3) and should reconsider whether the filing of application Form 1023 is appropriate for you. See Pub 557 for a description of other code sections under which you may qualify. 

Line 6. You are attempting to influence legislation if you directly contact or urge the public to contact members of a legislative body for the purpose of proposing, supporting, or opposing legislation. You are also attempting to influence legislation if you advocate the adoption or rejection of legislation. If you answer “Yes,” your explanation should include the percentage of your total time and total funds spent on such legislative activities. 

Organizations described in section 501 (c)(3) are prohibited from engaging in a substantial amount of legislative activities. Whether youre engaged in substantial legislative activities depends on all of the facts and circumstances. 

For this purpose, “legislation” includes action by Congress, a state legislature, a local council, or a similar governing body, with respect to acts, bills, resolutions or similar items (such as legislative confirmation of appointive offices). Legislation also includes action by the public in a referendum, ballot initiative, constitutional amendment, or similar procedure. Legislation generally doesnt include actions by executive, judicial, or administrative bodies. 

Organizations may involve themselves in issues of public policy without being engaged in legislative activity. For example, organizations may conduct educational meetings, prepare and distribute educational materials, or otherwise consider public policy issues. Similarly, an organization may appear before a governmental body at its request to offer testimony about a decision that may affect the organizations existence. 

Line 6a. Form 5768. Most public charities are eligible to elect to make expenditures to influence legislation by filing Form 5768, Election/Revocation of Election by an Eligible Section 501 (c)(3) Organization To Make Expenditures To Influence Legislation. By filing Form 5768, your legislative activities will be measured solely by an expenditure limit under section 501 (h) rather than by whether the legislative activity is considered substantial. Form 5768 describes the types of organizations that are eligible to make an election. You must file Form 5768 by mailing it to the address on the form. For a discussion of influencing legislation and the requirements of section 501(h), see Pub 557. Churches and private foundations arent eligible to make this section 501(h) election. 

Line 7. Intellectual property includes the following; 

  • Patents (for inventions);
  • Copyrights (for literary and artistic works such as novels, poems, plays, films, musical works, drawings, paintings, photographs, sculptures, architectural designs, performances, recordings, film, and radio or television programs);
  • Trade names, trademarks, and service marks (for symbols, names, images, and designs); and
  • Formulas, know-how, and trade secrets.

Line 8. These activities involve the education of the consumer on budgeting, personal finance, financial literacy, mortgage foreclosure assistance, or other consumer credit areas. These activities may also involve assisting the consumer in consolidating debt and negotiating between debtors and creditors to lower interest rates and waive late and over-limit fees. If you answer “Yes,” you may be subject to the requirements of section 501 (q). Search “501 (q)” on IRS.gov for information on these requirements and whether they apply to you. 

Line 9. A “relationship” between you and the recipient organization includes the following situations. 

  • You control the recipient organization, or it controls you through common officers, directors, or trustees, or through authority to approve budgets or expenditures.
  • You and the recipient organization were created at approximately the same time and by the same persons.
  • You and the recipient organization operated in a coordinated manner with respect to facilities, programs, employees, or other activities.
  • Persons who exercise substantial influence over you also exercise substantial influence over the recipient organization.

Line 9b. Answer “Yes,” if you make grants, loans, or other distributions (such as goods) to a foreign organization. 

Line 9g-i. The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against certain governments, entities, and individuals, as directed in Executive Orders. As part of the comprehensive and sustained campaign against terrorist financing, all U.S. persons, including U.S.-based charities, are prohibited from dealing with persons (individuals and entities) identified as being associated with terrorism on OFACs Specially Designed Nationals and Blocked Persons List (OFAC SDN List). Information about OFAC sanction programs and the OFAC SDN List are available at www.treasury.gov/ofac. 

Line 10. “foreign country” is a country other than the U.S., its territories and possessions, and the District of Columbia.
 

Line l0a-c. See instructions for lines 9g-i.
 

Line 11. You are a sponsoring organization of a donor-advised fund if you establish separate accounts that you own or control for a donor whereby the donor or donor-advisor may make recommendations about the investments of or distributions from the account. See Pub. 557 for more information on the definitions of sponsoring organizations and donor-advised funds. 

You can’t sponsor a donor-advised fund if you’re a private foundation. 

Line 12. school” is an educational organization whose primary function is the presentation of formal instruction and which normally maintains a regular faculty and curriculum and that normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. A school may include the following. 

  • Primary, secondary, preparatory, or high school.
  • College or university.
  • Trade or technical school.
  • Nursery or pre-school.
  • School that you operate as an activity, such as a school that is operated as an activity of a museum, historical society, or church.

If you’re a nursery or pre-school that doesn’t meet the description of a school, answer “No.”  

If youre a nursery, pre-school, or child care organization that doesnt meet the description of a school, you may still further an educational purpose if substantially all the care you provide is for the purpose of enabling individuals to be gainfully employed and your services are available to the general public (section 501 (k)). 

If youre a school, or if you operate a school as an activity (even if it is a secondary activity), complete Schedule B. See Pub. 557 for additional information. 

Line 13. “Hospital” or “medical care” includes the treatment of any physical or 

mental disability or condition, whether as an inpatient or outpatient. A hospital includes the following. 

  • Hospitals and rehabilitation institutions, outpatient clinics, or community mental health or drug treatment centers if the principal purpose or function is the providing of medical or hospital care or medical education or research.
  • Medical research organizationsif the principal purpose or function is the continuous active conduct of medical research in conjunction with a hospital.

If you provide “hospital or medical care,” or youre a medical research organization, complete Schedule C. 

See Pub. 557 for additional information. 

Line 14. “Low-income housing” refers to rental or ownership housing provided to persons based on financial need. If you provide low-income housing, complete Schedule F. 

Line 15. Answer “Yes,” if you pay money to an individual as a scholarship, fellowship, or education loan; for travel, study, or other similar purposes. Also, answer “Yes,” if you pay such amounts on behalf of an individual to a school or a tuition or educational savings program. Complete Schedule H—Section I. 

Travel, study, or other similar purposes include payments made to enhance a literary, artistic, musical, scientific, teaching or other similar capacity, skill, or talent of the individual recipient. These payments include, for example, amounts paid to: 

  • Vocational high school students to be used to purchase basictools;
  • Teachers to induce them to teach in apublic schoolsystem in an economically depressed area; and 
  • A scientific researcher to underwrite that individuals research project.

Educational grants don’t include amounts you pay to an individual as compensation, such as payments made to a consultant for personal services or to produce a report for you. 

Educational grants don’t include amounts paid to another organization that distributes your funds as a scholarship to an individual if you have no role in the selection process. 

If you’re a “private foundation” as described in Part VII, you must obtain advance approval of your grant-making procedures. You can use Schedule H—Section II, to request advance approval as part of this application process. You can complete Section II when you complete Part VII. Foundation Classification. 

Line 16. “Fundraising” includes efforts to raise funds through appeals for financial support. Fundraising may be conducted by your employees or volunteers, through an agent, or through an independent contractor. Check all the boxes that apply. 

For purposes of this application, “bingo” is a game of chance played with cards that generally are printed with five rows of five squares each on which participants place markers to form a pre-selected pattern to win the game. “Other (non-bingo) gaming activities” include pull-tabs, raffles, keno, split-the-pot, and other games of chance. 

Gaming doesnt further an exempt purpose under section 501(c)(3). Except to the extent that an exception may apply, your revenue from gaming activities will be subject to unrelated business income tax. See Pub. 3079 for further information about gaming. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”PartV” css=”.vc_custom_1582307157075{padding-top: 40px !important;}”][vc_column][vc_column_text]Part V. Compensation and Other Financial Arrangements 

Reminder. Answer all questions in this part as they pertain to your past, present, and future activities. 

For purposes of Part V, compensation includes: 

  • Salary orwages;
  • Deferredcompensation;
  • Retirement benefits, whether in the form of a qualified or non-qualified employee plan (pensions or annuities);
  • Fringe benefits (personal vehicle, meals, lodging, personal and family educational benefits, low-interest loans, payment of personal travel, entertainment, or other expense, athletic or country club membership, and personal use of your property); and
  • Bonuses.

Example. An organization could compensate a director as follows: 

Wages Director Compensation … 

Salary as Chief Executive 

Officer 

Deferred retirement 

Health insurance policy … 

Use of a vehicle 

Total Compensation 

Make sure the information you provide in Part V is consistent with the information you enter in Part VI. Financial Data. 

Line 1. Compensation. Check “Yes,” if you do or you will compensate your officers, directors, or trustees. Also, check “Yes,” if you will or you do have highest compensated employees or highest compensated independent contractors. 

For purposes of this form, “highest compensated” employees or independent contractors are persons to whom you pay over $100,000 of compensation, including compensation from related organizations. 

For information on determining if an individual is an employee or an independent contractor, see Pub. 15-A, Employers Supplemental Tax Guide. 

Line 1e. “Similarly situated organizations” means tax-exempt or taxable organizations of comparable size, purpose, and resources. Adjustments due to geographic area and other specified conditions are appropriate, but you should document the adjustments. You should document the sources(s) of comparable compensation data, both taxable and non-taxable, and retain copies in your permanent records. 

Line 1 g. “Reasonable compensation” 

is the amount that would ordinarily be paid for like services by like organizations under like circumstance as of the date the compensation arrangement is made. Establishing and documenting your decisions about compensation is important because excess compensation (including cash and other benefits that arent accounted for as reasonable compensation for services) may result in excise taxes on both the individual and you, and may jeopardize your tax exemption. 

Line 2. A conflict of interest arises when a person in a position of authority over an organization, such as a director, officer, or manager, may benefit personally from a decision he or she could make. A sample Conflict of Interest Policy is included as Appendix A. This sample conflict of interest policy doesnt prescribe any specific requirements. Therefore, organizations should use a conflict of interest policy that best fits their organizations. 

Adoption of a conflict of interest policy isnt required to obtain tax-exempt status. However, by adopting the sample policy or a similar policy, you will be choosing to put in place procedures that will help your officers, directors, and trustees recognize situations that could present potential or actual conflicts of interest so that you can take steps to reduce the risk that those in positions of authority over you may receive an inappropriate benefit. 

The sample conflict of interest policy in Appendix A includes items marked “Hospital insert-for hospitals that complete Schedule C” that are intended to be adopted by hospitals 

Line 3. A fixed payment means a payment that is either a set dollar amount or fixed through a specific formula where the amount doesnt depend on discretion. For example, a salary of $200,000 that is adjusted annually based on the increase in the Consumer Price Index is a fixed payment. 

non-fixed payment” means a payment that depends on discretion. For example, a bonus of up to $100,000 that is based on an evaluation of performance by the governing board is a non-fixed payment because the governing body has discretion over whether the bonus is paid and on the amount of the bonus. 

Line 4. Dont include purchases or sales of goods and services in your normal course of operations that are available to the general public under similar terms and conditions. 

Answer “Yes,” if any of your officers, directors, or trustees: 

  • Is an officer, director, or trustee of another organization (other than a section 501 (c)(3) organization) that you will purchase or sell goods, services, or assets from or to; or
  • Possesses more than 35% ownership interest in any organization that you will purchase or sell goods, services, or assets from or to.

Arms length. An arms length standard exists where the parties have an adverse (or opposing) interest. For example, a seller wants to sell his goods at the highest possible price, while a buyer wants to buy at the lowest possible price. These are adverse interests. 

In negotiating with a person, an adverse interest is assumed if that person is otherwise unrelated to you in the sense of not being in a position to exercise substantial influence over you or your affairs. If the person is in a position to exercise substantial influence over your affairs, then an arms length standard requires additional precautions to eliminate the effect of the relationship. 

Using a conflict of interest policy, 

information about comparable transactions between unrelated parties, and reliable methods for evaluating the transaction, are examples of precautions that would help make the negotiation process equivalent to one between unrelated persons. 

Fair market value. This is the price at which property or the right to use property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of relevant facts.  

Line 5. Answer “Yes,” if any of your officers, directors, or trustees: 

  • Is an officer, director, or trustee in another organization (other than a section 501 (c)(3) organization) that has a lease, contract, loan, or other agreement with you; or
  • Possesses more than a 35% ownership interest in any organization that has a lease, contract, loan, or other agreement with you. For example, answer “Yes,” if one of your directors is an officer for a section 501 (c)(4) organization with whom you have a lease for office space, or if one of your directors owns more than 35% of the voting stock of a corporation to which you made a loan.

Line 6. “Develop” means the planning, financing, construction, or provision of similar services involved in the acquisition of real property, such as land or a building. For example, you should provide information regarding the services of a consultant who arranges your acquisition of a facility through the issuance of tax-exempt bonds. 

Line 7. “Manage” means to direct or administer. For example, you would provide information about an organization hired to administer a museum gift shop. 

Line 8. “joint venture” is a legal agreement in which the persons jointly undertake a transaction for mutual profit. Generally, each person contributes assets and shares risks. Like a partnership, joint ventures can involve any type of business transaction and the persons involved can be individuals, groups of individuals, companies, or corporations. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”PartVI” css=”.vc_custom_1582307174808{padding-top: 40px !important;}”][vc_column][vc_column_text]Part VI. Financial Data 

Line 1. Select the option that best describes you to determine the years of revenues and expenses you need to provide. 

Completed less than 1 year. If youve existed for less than 1 year, provide projections of your likely income and expenses for your current year and projections of your likely income and expenses for the next 2 years based on a reasonable and good faith estimate of your future finances for a total of 3 years of financial information. Place financial information for the year youre filing this application in the column marked Current tax year. 

Completed more than 1 year, fewer than 5 years. If youve existed for more than 1 year but fewer than 5 years, provide your actual income and expenses for each completed year youve existed and projections of your likely income and expenses based on a reasonable and good faith estimate of your future finances for your current year and each year you havent existed, for a total of 4 years of financial information. Place financial information for the year youre filing this application in the column marked Current tax year. 

Completed 5 years or more. If youve existed for 5 years or more, provide your actual income and expenses for your 5 most recently completed tax years. 

Place financial information for your most recently completed tax year in the column marked Current tax year. 

We may request financial information for more than 5 years. 

A.Statement of Revenue and Expenses 

Preparing the statement. Prepare the statement using the method of accounting you use in keeping your books and records. 

Prepare the statement using the accounting period entered on Part I, line 3. Enter “0” if a particular revenue or expense doesnt apply to you. 

Your financial information should reflect your activities described in this application. 

Line 1. Enter the total gifts, grants, and contributions you receive (other than membership dues reported on line 2 and described below). Include items of value that you receive as gifts, grants, or contributions. For example, if one of your activities is a food drive, include the value of the donated food on this line. Also include on this line payments a governmental unit makes to enable you to both accomplish your exempt purpose(s) and to provide a service or facility directly to the general public. 

See the instructions for line 9 if youre uncertain whether revenue should be included as a grant on line 1 or as gross receipts on line 9. Include unusual grants on line 12 and not on line 1. 

Examples. 

1.A city pays the symphony orchestra to provide free music programs in the public schools. The programs are open to the public. This income received from a governmental unit accomplishes the orchestra’s exempt purpose and directly provides a service to the general public. This income is a grant to the symphony orchestra that should be listed on line 1. 

2.The symphony orchestra sells tickets to the public for its fall season. 

Such income is gross receipts received suitable for the school systems elementary music curriculum. This payment by a governmental unit for the music compositions is primarily for the school systems own use, not for the direct benefit of the public. Therefore, this income is gross receipts received from a governmental unit in performance of the orchestras exempt function that should be listed on line 9. 

Line 2. Enter the amount you receive from members to provide support to the organization. Dont include payments from members or on behalf of members to purchase admissions, merchandise, services, or use of facilities. 

Line 3. Enter your gross income from dividends, interest, payments received on securities, loans, rents, and royalties you hold for investment purposes. 

See Pub. 598 for additional information regarding royalties treated as unrelated business income. 

Line 4. Enter your net income from unrelated business activities. “Unrelated business income” generally is income from any trade or business activity that is regularly carried on, and not related to your exempt purpose. Certain exceptions and exclusions may apply. 

Report on line 9 income from activities that arent related to the accomplishment of your exempt purposes, but arent considered unrelated business activities. For example, report income from the sale of merchandise by volunteers that isnt treated as an unrelated trade or business on line 9. 

See Pub. 598 for additional information regarding unrelated business income. 

Line 5. Enter amounts any local tax authority collects from the public on your behalf. 

Line 6. Enter the value of services or facilities a governmental unit furnishes to you. Use the fair market value of the services or facilities. Dont include the value of services or facilities generally provided by the governmental unit to the public without charge. 

Line 7. Enter your total income from all sources not reported on lines 1 through 6, or lines 9,11, and 12. Provide an itemized list in line 25, showing each type and amount of income included, and a brief description of each type of income. 

Line 8. Lines 1 through 7 will be added for you. 

Line 9. Enter income from activities that you conduct to further your exempt purposes (excluding amounts listed on other lines). Also, include as gross receipts the income from activities conducted: 

  • Intermittently (not regularly carried on), such as an occasionalauction;
  • With substantially all (at least 85%) volunteer labor, such as a carwash;
  • For the convenience of members, students, patients, officers, or employees, such as a parking lot for a schools students and employees; or
  • With substantially all contributed merchandise, such as a thrift store.

See Pub. 598 for additional information regarding income that isnt from an unrelated trade or business. 

“Gross receipts” also includes payment by a governmental unit that may be called a “grant” but is actually payment for a service or facility for the use of the government payer, rather than for the direct benefit of the public. 

Example. The state government gives a conservation group a grant to study the effects of a new sewage treatment plant on an ecologically significant woodland area. Although the payment is called a grant, it is actually gross receipts that should be included on line 9. The payment is by a governmental unit (state) for a study for its own use, not for the direct benefit of the general public. A for-profit consulting company couldve done the study rather than by the tax-exempt conservation group. Provide an itemized list of your gross receipts in line 25, describing the sources and amounts of income. For payments by a governmental unit, list the payer, the purpose of the payment, and the payment amount. 

Line 10Lines 8 and 9 will be added for you. 

Line 11. Enter any net gain or loss on the sale of capital assets. Provide an itemized list by asset category (for example, real estate or securities) showing gross sales, cost or other basis/sales expenses, and gain or loss by asset category in line 25. You may use the format in Figure 2. 

Line 12. Enter any “unusual grants,” 

which generally are any substantial contributions and bequests you received from disinterested persons that, by their size, adversely affect your classification as a public charity. “Unusual grants” are unusual, unexpected, and received from an unrelated party. Provide an itemized list of any unusual grants, including the amount in line 25, and explain how it was unusual, unexpected, and from an unrelated party. 

For additional information about unusual grants and a description of public charity classifications, see Pub. 557. 

Line 13. Lines 10 through 12 will be added for you. 

Lines 14. Enter the total expenses you incur for soliciting gifts, grants, and contributions included on line 1. Include fees paid to professional fundraisers for soliciting gifts, grants, and contributions. 

Line 15Enter the total amount you pay out to both individuals and organizations. Provide an itemized list in line 25, identifying recipients (using letter designations such as A, B, C, etc.), a brief description of the purposes or conditions of payments, and the amounts paid. 

Colleges, universities, and other educational institutions and agencies subject to the Family Educational Rights and Privacy Act (20 U.S.C. 1232g) dont need to list the names of individuals to whom they provided scholarships or other financial assistance where such disclosure would violate the privacy provisions of the law. Instead, group each type of financial aid provided, indicate the number of individuals who received the aid, and specify the aggregate dollar amount. 

Maintain (but don’t submit) a list showing the names of recipients associated with each letter designation. 

Line 16. Enter total payments you make to or for the benefit of your members (not including any amounts listed on line 15). Provide an itemized list in line 25, identifying recipients (using letter designations), a brief description of the purposes or condition of payments, and the amounts paid. 

Maintain (but don’t submit) a list showing the names of recipients associated with each letter designation. 

Line 17. Enter the total amount of compensation you pay to your officers, directors, and trustees. 

Line 18. Enter the total amount of salaries and wages you pay to employees (not reported on line 17). 

Line 19. Enter your total interest expenses for the year. Dont include mortgage interest treated as an occupancy expense on line 20. 

Line 20. Enter the amount you pay for the use of office space or other facilities, heat, light, power and other utilities, outside janitorial services, mortgage interest, real estate taxes, and similar expenses. 

Line 21. Enter the total depreciation, depletion, and similar expenses you incur. 

Line 22. Enter the total professional fees you pay. Professional fees are amounts charged by individuals and entities that arent your employees. They include fees for professional fundraisers (other than fees listed on line 14, earlier), accounting services, legal counsel, consulting services, contract management, or any independent contractors. 

Line 23. Enter any expenses you didnt include in the lines above, such as for program services. Provide an itemized list in line 25, showing the type and amount of each significant expense. 

Line 24. Lines 14 through 23 will be added for you. 

B.Balance Sheet 

Complete the balance sheet for your most recently completed tax year. If you havent completed a full tax year, use the most current information available. Be sure to enter the year-end date for the information provided and not the date you prepare this application. Enter “0” if a particular asset or liability doesnt apply to you. 

Line 1. Enter your total cash in checking and savings accounts, temporary cash investments (money market funds, CDs, treasury bills, or other obligations that mature in less than 1 year), and petty cash funds. 

Line 2. Enter your total accounts receivable that arose from the sale of goods and/or performance of services, less any reserve for bad debt. 

Line 3. Enter the amount of materials, goods, and supplies you purchased or manufactured and held to be sold or used in some future period.  

Line 4. Enter the total amount of bonds or notes you issued that will be repaid to you. Provide an itemized list in line 19, that shows the name of each borrower (using a letter designation), the borrowers relationship to you, a brief description of the obligation, the rate of return, the due date, and the amount due. 

Maintain (but don’t submit) a list showing the names of borrowers associated with each letter designation. 

Line 5. Enter the total fair market value 

of corporate stocks you hold. Provide an itemized list of your corporate stock holdings in line 19. 

For stock of closely held corporations, list the name or the corporation, a brief summary of the corporations capital structure, the number of shares held, and their value as carried on your books. If valuation doesnt reflect current fair market value, also include fair market value. 

For stock traded on an organized exchange or in substantial quantities over the counter, list the name of the corporation, a description of the stock, and the principal exchange on which it is traded, the number of shares held, their value as carried on your books, and their fair market value. 

Line 6. Enter your total amount of loans (personal and mortgage loans) receivable. Provide an itemized list in line 19 that identifies each borrower (using a letter designation), the borrowers relationship to you, purpose of loan, repayment terms, interest rate, and original amount of loan. Report each loan separately, even if more than one loan was made to the same person. 

Maintain (but don’t submit) a list showing the names of borrowers associated with each letter designation. 

Line 7. Enter the total book value of your other investments. Include the total book value of government securities (federal, state, and municipal), and buildings and equipment held for investment purposes. Provide an itemized list in line 19 identifying and reporting the book value of each building/item of equipment held for investment purposes. 

Line 8. Enter the total book value of buildings and equipment not held for investment purposes. This includes facilities you own and equipment you use in conducting your exempt activities. Provide an itemized list in line 19 of these assets held at the end of the current tax year/period, including the cost or other basis. 

Line 9. Enter the total book value of land not held for investment purposes. 

Line 10. Enter the total book value of any other category of your assets not reported on lines 1 through 9, for example, patents, copyrights, or other intangible assets. Provide an itemized list of each asset in line 19. 

Line 11. Lines 1 through 10 will be added for you. 

Line 12. Enter the total amount of your accounts payable to suppliers and others, such as salaries payable, accrued payroll taxes, and interest payable. 

Line 13. Enter the total unpaid portion of grants and contributions you committed to pay to other organizations or individuals. 

Line 14. Enter the total of your mortgages and other notes payable outstanding at the end of the current tax year/period. Provide an itemized list in line 19 showing each note separately, including the lenders name, purpose of loan, repayment terms, interest rate, and original amount. 

Line 15. Enter the total amount of any other liabilities not reported on lines 12 through 14. Provide an itemized list in line 19 of these liabilities, including the amounts you owe. 

Line 16. Lines 12 through 15 will be added for you. 

Line 17. Linder fund accounting, an organization segregates its assets, liabilities, and net assets into separate funds according to restrictions on the use of certain assets. Each fund is like a separate entity in that it has a self-balancing set of accounts showing assets, liabilities, equity (fund balance), income, and expenses. If you dont use fund accounting, report only the “net assets” account balances, which include capital stock, paid-in capital, retained earnings or accumulated income, and endowment funds. 

Line 18. Lines 16 and 17 will be added for you. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”PartVII” css=”.vc_custom_1582307208552{padding-top: 40px !important;}”][vc_column][vc_column_text]Part VII. Foundation Classification 

Organizations that are exempt under section 501(c)(3) are private foundations unless they are: 

  • Churches, schools, hospitals, governmental units, entities that undertake testing for public safety, organizations that have broad financial support from the general public; or
  • Organizations that support one or more organization(s) that are themselves classified as public charities.

Section 501(c)(3) organizations excepted from private foundation classification are public charities. Unless you meet one of the exceptions above, youre a private foundation. 

You can only select one foundation classification. 

1.organizations or other governmental units, and 

2.All other facts and circumstances, including the public nature of your governing board, the extent to which your facilities or programs are publicly available, the extent to which nature your dues encourage membership, and whether your activities are likely to appeal to persons having a broad common interest or purpose. For additional information about the 10% facts and circumstances test, see Pub. 557 and Reg. 1.170A-9(f)(3). 

509(a)(2). Select this classification if you normally receive more than one-third of your support from contributions, membership fees, and gross receipts from activities related to your exempt 

Line 1. Select the foundation classification youre requesting from the list below. The form will then take you to additional lines or parts of the application that you must complete based on your response. 

509(a)(1) and 170(b)(1)(A)(vi). Select this classification if you normally receive a substantial part of your support from grants from governmental units or from contributions from the general public, or a combination of these sources. Typically, you would show a substantial part of your income on Part Vl-A. Statement of Revenue and Expenses, lines 1 and 2. 

Under this public charity 

classification, you must meet the one-third public support test or 10% facts and circumstances test. See Pub. 557 for more information. 

Public support test. An organization must receive either: 

1.At least one-third of its total support from governmental agencies, contributions from the general public, and contributions or grants from other public charities; or 

2.At least 10% of its total support from governmental agencies, contributions from the general public, and contributions or grants from other public charities; and also satisfy a facts and circumstances test. 

Facts and circumstances test. Facts and circumstances include: 

3.The amount of support you received from the general public, governmental units, or public charities; 

Whether you have a continuous and bona fide program for solicitation of funds from the general public, governmental units, or public charities, or carry on activities designed to attract support from functions, or a combination of these sources, and not more than one-third of your support from gross investment income and net unrelated business income. Typically, you would show a substantial part of your income on Part Vl-A. Statement of Revenues and Expenses, lines 1,2, and 9. 

Under this public charity classification, you must meet both the “one-third public support test” and the “not-more-than-one-third investment income and net unrelated business income test,” lines 1 through 13. See Pub. 557 for additional information about these tests. 

509(a)(1) and 170(b)(1)(A)(i). Select this classification if your primary purpose is operating a church or convention or association of churches. The term “church” includes mosques, temples, synagogues, etc. If you select this box, complete Schedule A. 

509(a)(1) and 170(b)(1)(A)(ii). Select this classification if your primary purpose is operating a school. If you select this box, complete Schedule B. 

If you operate a school but it isnt your primary purpose, dont select this classification. However, you must still complete Schedule B. See Part IV, line 12. 

509(a)(1) and 170(b)(1)(A)(iii). Select this classification if your primary purpose is providing medical or hospital care or medical education or research (performed in association with a hospital). If you select this box, complete Schedule C. 

A hospital includes a rehabilitation institute, outpatient clinic, community mental health clinic, drug treatment center, or skilled nursing facility. A hospital doesnt include convalescent homes, homes for children or the aged, or institutions whose principal purpose or function is to train handicapped individuals to pursue some vocation. 

Cooperative hospital service organizations described in section 501 (e) should also check this box and complete Schedule C. 

509(a)(1) and 170(b)(1)(A)(iv). Select this classification if youre organized and operated exclusively to benefit a college or university owned or operated by a governmental unit. You must also normally receive a substantial part of your support from a governmental unit or from contributions from the general public. 

509(a)(1) and 170(b)(1)(A)(ix). Select this classification if youre an agricultural research organization described in section 170(b)(1)(A)(ix) operated in conjunction with a land grant college or university or a non-land grant college of agriculture.  

 

In Part IV, line 1, include information detailing your agricultural research program and how you will spend contributions to your program, including a description of how youre engaged in the continuous active conduct of agricultural research (as defined in Section 1404 of the Agricultural Research, Extension, and Teaching Policy Act of 1977), information showing that youre operated in conjunction with a land grant college or university or a non-land grant college of agriculture (as defined in Section 1404 of the Agricultural Research, Extension, and Teaching Policy Act of 1977), and information discussing the timing of when you will spend contributions for research. 

509(a)(3). Select this classification if youre organized and operated to support one or more public charities described in section 509(a)(1) or 509(a)(2) or an organization that is tax exempt under section 501 (c)(4), (5), or (6) and meets the public support test of section 509(a)(2). See the instructions for Schedule D for more information about the requirements for this classification, including the required relationship you must have with your supported organization(s). Complete Schedule D. 

509(a)(4). Select this classification if your primary purpose is to test products to determine their acceptability for use by the general public. 

Contributions to organizations of this type arent deductible under section 170(c). Also, organizations that primarily test for specific manufacturers dont qualify for exemption under section 501 (c) (3). 

Select my classification for me. Select this option if you believe youre a public charity but would like the IRS to select the correct public charity classification (509(a) (1) and 170(b)(1)(A)(vi) or 509(a)(2)) for you. 

Private foundation. Select this classification if you dont meet one of the exceptions listed above. 

Line la. Section 508(e) provides that a private foundation isnt tax exempt unless its organizing document contains specific provisions. These specific provisions require that you operate to avoid liability for excise taxes under sections 4941(d), 4942, 4943(c), 4944, and 4945(d). You can also meet these provisions by reliance on state law. 

See Pub. 557 for samples of provisions that will meet section 508(e). Also, see Appendix B for a list of states that have enacted statutory provisions that satisfy the requirement of section 508(e), subject to notations. Appendix B is based on Rev. Rul. 75-38, 1975-1 C.B. 161. 

Line 1c. Some private foundations are private operating foundations. Private operating foundations make qualifying distributions directly for the active conduct of their educational, charitable, and religious purposes. “Directly for the active conduct” means that you use the distributions yourself to carry out the programs for which youre organized and operated. Grants made to assist other organizations or individuals are normally considered indirect. 

Line 1 d. If you have existed for year or more, you must provide information that demonstrates you meet the requirements to be classified as a private operating foundation, including the income test and either the endowment test, the assets test, or the support test. If you have existed for less than 1 year, you must sufficiently describe how youre likely to meet these requirements and tests. You may also submit an affidavit or opinion of counsel giving enough facts about your operations and support to enable us to determine that youre likely to meet these requirements. 

See Pub. 557 for additional information about private operating foundations. 

Line 2. Confirmation of public support status. If you have been in existence for more than 5 years, and you requested classification as a public charity described in sections 509(a)(1) and 170(b)(1)(A)(vi), you must confirm that you meet the public support test. 

To show that you meet the required public charity support test, complete lines 2(i) and 2(ii). Calculate your public support based on the accounting method you used to complete Part Vl-A, Statement of Revenues and Expenses. 

Line 2(i). 509(a)(1) and 170(b)(1)(A) (vi). Check “Yes,” if you received contributions from any person, company, or organization (other than a governmental unit described in section 170(c)(1) or a publicly supported organization under section 170(b)(1)(A)(vi)), whose gifts totaled more than 2% of the amount on the total of amounts entered on line 8 of Part Vl-A, Statement of Revenue and Expenses, and identify those contributors by letter (A, B, C, etc.) and list the amount(s) contributed by each. Keep, but dont submit, a list of the names of your donors with the associated letter designations. 

Line 2(ii). Use Schedule A (Form 990 or 990-EZ) Public Charity Status and Public Support, Part II, Support Schedule for Organizations Described in Sections 170(b)(1)(A)(iv) and 170(b)(1)(A)(vi), and its instructions to determine if you met the public support test for your most recent 5-year period.  

Line 2a(i). 509(a)(2). Check “Yes,” if you received amounts listed on lines 1,2, and 9 of Part Vl-A, Statement of Revenue and Expenses, from any disqualified persons and identify those disqualified persons by letter (A, B, C, etc.) and list the amounts contributed by each. Keep, but dont submit, a list of the names of your donors with the associated letter designations. 

Line 2a(ii). Check “Yes,” if you received amounts paid by an individual or organization greater than the larger of 1 % of line 10, of Part Vl-A, Statement of Revenues and Expenses, or $5,000 for any completed tax year, and identify those individuals or organizations by letter and list the amount(s) received from each. Keep, but dont submit, a list of the names of your donors with the associated letter designations. 

Dont include disqualified persons in this list. Disqualified persons should be listed in line 2(a)(i). For purposes of this application, a “disqualified person’ ’is any individual or organization that is any of the following. 

1.A “substantial contributor’’ to you 

(defined below). 

2.An officer, director, trustee, or any other individual who has similar powers or responsibilities. 

3.An individual who owns more than 20% of the total combined voting power of a corporation that is a substantial contributor. 

4.An individual who owns more than 20% of the profits interest of a partnership that is a substantial contributor. 

5.An individual who owns more than 20% of the beneficiary interest of a trust or estate that is a substantial contributor. 

  1. Amember of thefamily of any individual described in 1, 2, 3, 4, or 5 above. 

7.A corporation in which any individuals described 1, 2, 3, 4, 5, or 6 above hold more than 35%> of the total combined voting power. 

8.A trust or estate in which any individuals described in 1, 2, 3, 4, 5, or 6 above hold more than 35% of the beneficial interests. 

9.A partnership in which any individuals described in 1, 2, 3, 4, 5, or 6 above hold more than 35% of the profits interest. 

Substantial contributor.  

substantial contributor is any individual or organization that gave more than $5,000 to you from the date you were formed or other date that your exemption would be effective, to the end of the year in which the contributions were received. This total amount contributed must also be more than 2% of all the contributions you received. A creator of a trust is treated as a substantial contributor regardless of the amount contributed. For more information regarding substantial contributors, go to IRS.gov/Charities-Non-Profits/Private- Foundations/Substantial-Contributor- Private-Foundation. 

Family members. A “member of the family” includes the spouse, ancestors, children, grandchildren, great-grandchildren, and their spouses. 

For additional information concerning members of the family, go to IRS.gov/ Charities-Non-Profits/Charitable- Organizations/Member-of-the-Family. 

Further information about disqualified persons, can be obtained at IRS.gov/ Charities-Non-Profits/IRC-Setion-4946- Definition-of-Disqualified-Person. 

Line 2a(iii). Use Schedule A (Form 990 or 990-EZ), Public Charity Status and Public Support, Part III, Support Schedule for Organizations Described in Section 509(a)(2), and its instructions to determine if you meet the public support test for your most recent 5-year period. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”PartVIII” css=”.vc_custom_1582307236095{padding-top: 40px !important;}”][vc_column][vc_column_text]Part VIII. Effective Date 

Line 1. Use the formation date you listed in Part II, line 2, and the date you will submit this electronic form and required user fee payment to determine whether youre submitting this application within 27 months from the month in which you were formed. If youre not submitting this application within 27 months from your formation, complete Schedule E. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”PartIX” css=”.vc_custom_1582307254299{padding-top: 40px !important;}”][vc_column][vc_column_text]Part IX. Annual Filing Requirement 

Most organizations must file an annual return (Form 990, 990-EZ, or Form 990-PF) or notice (Form 990-N, Electronic Notice (e-Postcard)). Exceptions to this rule include churches, certain church affiliated organizations, and certain affiliates of a governmental unit. You can find more detailed information about filing requirements and exceptions from the requirement to file in the Instructions for Form 990. 

The following are some general rules. 

  • A private foundation must file Form 990-PF annually, regardless of its gross receipts.

Unless specifically required to file Form 990 or Form 990-EZ (see the Instructions for Form 990), most public charities that normally have gross receipts of $50,000 or less may satisfy their filing obligation with Form 990-N, Electronic Notice (e-Postcard)  

If you fail to file a required information return or notice for 3 consecutive years, your exempt status will be automatically revoked. 

Line 1. Check “Yes,” if youre claiming you are excepted from filing a Form 990-series return or notice and indicate the reason you believe youre excepted from filing. See Pub. 557 and the Instructions for Form 8940, Request for Miscellaneous Determination, for more information on the requirements for the various filing exceptions. Provide information regarding how you meet your requested exception in your narrative description of activities or as part of an uploaded supplemental response. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”PartX” css=”.vc_custom_1582307270923{padding-top: 40px !important;}”][vc_column][vc_column_text]Part X. Signature 

Signature requirements. An officer, director, trustee, or other official who is authorized to sign for the organization must sign Form 1023. The signature must be accompanied by the title or authority of the signer and the date. 

The person signing Form 1023 must be listed as an officer, director, or trustee within the first five entries of Part I, line 9. 

Upload Checklist 

Documents to upload. Check the boxes to indicate which documents are included in the file you upload with your application. 

You must upload a copy of your organizing document and any amendments to it along with a copy of your bylaws, if adopted. The other listed documents are not required. 

Put your name and EIN on each page of your supplemental response and identify the part and line number to which the information relates. 

Pay.gov can accommodate only one uploaded file. Consolidate your attachments into a single PDF file, which cannot exceed 15MB. 

If your PDF file exceeds the 15MB limit, remove any items over the limit and contact IRS Customer Accounts Services at 877-829-5500 for assistance on how to submit the removed items. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”ScheduleA” css=”.vc_custom_1582307287446{padding-top: 40px !important;}”][vc_column][vc_column_text]Schedule A. Churches 

There is no single definition of the word “church” for tax purposes. When determining whether a section 501 (c)(3) religious organization is described as a church (described in section 509(a)(1) and 170(b)(1)(A)(i)), we will consider characteristics generally attributed to churches and the facts and circumstances of each organization applying for public charity classification as a “church.”  

The characteristics generally attributed to churches are: 

  • A distinct legal existence,
  • A recognized creed and form of worship,
  • A definite and distinct ecclesiastical government,
  • A formal code of doctrine and discipline,
  • A distinct religious history,
  • A membership not associated with any other church or denomination,
  • Ordained ministers ministering to the congregation,
  • Ordained ministers selected after completing prescribed courses of study,
  • A literature of its own,
  • Established places of worship,
  • Regular congregations,
  • Regular religious services,
  • Sunday schools for the religious instruction of the young, and
  • Schools for the preparation of ministers.

Although you dont need to meet each of the above criteria to be classified as a church, youre generally required to have a congregation or other religious membership group. For purposes of foundation classification under section 509(a)(1) and 170(b)(1 )(A)(i), the term “church” includes, without limitation, mosques, temples, and synagogues, and certain other forms of religious organizations. For more information, see Pub. 1828. 

The practices and rituals associated with your religious beliefs or creed must not be illegal or contrary to public policy. 

Specific Line Items 

Line 1. Describe your written creed, statement of faith, or summary of beliefs. 

Line 2. Your literature includes any writings about your beliefs, rules, or history. 

Line 3. A “code of doctrine and discipline” refers to a body of laws or rules that govern behavior. 

Line 4. A “religious hierarchy or ecclesiastical government” refers to people or institutions that exercise significant influence or authority over your church. 

Line 5. Answer “Yes,” if youre part of a group of churches with similar beliefs and structures, such as a convention, association, or union of churches. 

Line 6. A “form of worship” refers to religious practices that express your devotion to your creed, faith, or beliefs. 

Line 7. Indicate the regular days and times of your religious services. Describe the order of events during your regular worship service and explain how the activities conducted as part of your services further your religious purposes. 

Line 7a. Enter the average number of members and non-members who attend your regularly scheduled religious services. 

Line 8. An “established place of worship” is a place where you hold regularly scheduled religious services. It may be a place that you own, rent, or that is provided free for your use. 

Line 9. An “established congregation” or “other religious membership group” includes individuals who regularly attend and take part in the religious services of your organization at an established location. An established congregation generally doesnt include members of only one family. If you answer “No,” because you dont have an established congregation or other religious membership, you may be a religious organization that doesnt qualify as a church. If you dont qualify as a church, you will need to go back to Part VII, line 1, to reconsider your public charity classification. 

You may request classification as [TIP] church at a later date after you establish a congregation or other religious membership group. For information about this option, see Form 8940, Request for Miscellaneous Determination Under Section 507, 509(a), 4940, 4942, 4945, and 6033 of the Internal Revenue Code, or contact our customer account service representatives at 877-829-5500 (toll-free). 

Line 9a. Enter the total number of your current members. If you have no members, enter zero (0). 

Line 9b. Answer “Yes,” if you have a prescribed way to become a member. Answer “Yes,” even if you just keep records of who is currently a member. Describe any actions required for individuals to become members. 

Line 9c. Describe any rights and benefits of members. You should include details of any levels of membership and the rights and/or benefits associated with each level. 

Line 9d. If your members may be associated with another denomination or church, describe the circumstances in which your members would be members of your church and another church. 

Line 9e. See Appendix C for a description of the word “family.” 

Line 10. Answer “Yes,” if you conduct baptisms, weddings, funerals, or other religious rites. 

Line 11. A school for the religious instruction of the young refers to any regularly scheduled religious, educational activities for youth. 

Line 12. A “prescribed course of study” refers to formal or informal training. It doesnt include self-ordination or paying a fee for an ordination certificate without completing a course of study. Describe the course of study completed by your religious leaders. 

Line 15. Provide any additional information you would like us to consider that would help us classify you as a church. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”ScheduleB” css=”.vc_custom_1582307310789{padding-top: 40px !important;}”][vc_column][vc_column_text]Schedule B. Schools, Colleges, and Universities 

An organization qualifies as a school (for purposes of classification under sections 509(a)(1) and 170(b)(1 )(A)(ii)) if all the following applies. It: 

  • Presents formal instruction as its primary function,
  • Has a regularly scheduled curriculum,
  • Has a regular faculty of qualified teachers,
  • Has a regularly enrolled student body, and
  • Has a place where educational activities are regularly carried on.

The term school” includes primary, secondary, preparatory, high schools, colleges, and universities. An organization wont be described as a school under sections 509(a)(1) and 170(b)(1)(A)(ii) if it engages in both educational and non-educational activities, unless the latter are merely incidental to the educational activities. Non-traditional schools such as an outdoor survival school or a yoga school may qualify. However, an organization may further an educational purpose without satisfying all the conditions listed above that describe a school. Such organizations may qualify as public charities based upon their sources of support as organizations described in sections 509(a)(1) and 170(B)(1)(A)(vi) or section 509(a)(2).

Specific Line Items 

Line 1. Answer “Yes,” if you have a regularly scheduled curriculum, a regular faculty of qualified teachers, a regularly enrolled student body, and facilities where your educational activities are regularly carried on. 

 If you answer “Yes, ”‘you should maintain in your records evidence that you meet these factors, such 

as: 

  • A list of required courses of study, dates and times courses are offered, and other information about how to complete required courses; Certification by the appropriate state authority or successful completion of required training for qualifiedteachers; 
  • Records of regular attendance by students at your facility; and
  • A lease agreement or deed for your facility.

If you answer “No,” you may not meet the requirements of a school and you may need to go back to Part VII, line 1, to reconsider your foundation classification if you requested classification as a school under sections 509(a)(1) and 170(b)(1 )(A) (ii). 

Line 2. Answer “Yes,” if your primary function of the school is the presentation of formal instruction. If you answer “No,” you may not meet the requirements for classification as a school and may want to go back to Part VII, line 1, to reconsider your foundation classification if you requested classification as a school under sections 509(a)(1) and 170(b)(1)(A)(ii). 

Line 3. Answer “Yes,” if youre a public school and explain how youre operated by the state or a subdivision of a state, including if you have a signed contract or agreement with a state or local government under which you operate and receive funding. If you answer “Yes,” dont complete the remainder of Schedule B. 

Line 4. Answer “Yes,” if you were formed or substantially expanded when public schools in your district or county were desegregated by court order. 

If you’re unsure whether to answer “Yes, “contact an appropriate school official. 

Line 5. Answer “Yes,” if a state or federal administrative agency or judicial body ever determined your organization to be racially discriminatory. Identify the parties involved presented. Explain the reason for the action, the decision reached, and provide legal citations (if any) for the decision. 

Also, explain in detail any changes made in response to the action against your organization or the decision reached. 

Establishment of Racially Nondiscriminatory Policy 

Every private school is subject to the provisions of Revenue Procedure 75-50, 1975-2 C.B. 587, modified by Rev. Proc. 2019-22, 2019-22 I.R.B. 1260. See Pub. 557, which sets forth the requirements of Rev. Proc. 75-50 under the section for Private Schools. 

Publication of racially nondiscriminatory policy. A section 501 (c)(3) organization that is a private school must publish a notice of its racially nondiscriminatory policy as to students as follows. 

The M school admits students of any race, color, national origin, and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. It doesn’t discriminate on the basis of race, color, national origin, and ethnic origin in administration of its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. 

Annual certification. A private school must certify annually that it meets the requirements of Rev. Proc. 75-50, as modified by Rev. Proc. 2019-22, by filing Schedule A (Form 990, or Form 990-EZ) Organization Exempt Under Section 501(c)(3). 

Schools that dont file Form 990 or 990-EZ must make the certification by filing Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax. 

Line 7. Answer “Yes,” if your organizing document or bylaws contain a nondiscriminatory statement as to students similar to the one shown above or if you adopted such a policy by resolution of your governing body. State where your policy is located in your organizing document, bylaws, or if it is in an adopted resolution. If you answered “No,” you must adopt a nondiscriminatory policy before submitting this application. 

Line 8. Answer “Yes,” if your brochures, application forms, advertisements, and catalogues dealing with student admissions, programs, and scholarships contain a statement similar to the following: 

The M school admits students of any race, color, and national or ethnic origin. 

Line 8a. If you answered “No” to Line 8, check the box on line 8a if you agree that all future printed materials, including website content, will contain a statement of nondiscriminatory policy as to students similar to the one provided above. 

Line 9. You must make your nondiscriminatory policy known to all segments of the general community served by the school. One way to meet this requirement is to publish your nondiscriminatory policy annually in a newspaper or over broadcast media. Rev. Proc. 2019-22 now allows this publication requirement to be satisfied by continuously displaying your nondiscrimination statement on your Internet site, as described below. 

Check “Yes,” if you make your racially nondiscriminatory policy known to all segments of the general community you serve by: 

  • Publishing a notice of your policy in a newspaper of general circulation that serves all racial segments of thecommunity;
  • publicizing your policy over broadcast media in a way that is reasonably expected to be effective; or
  • display a notice of your policy at all timeson your primary, publicly accessible Internet homepage in a manner reasonably expected to be noticed by visitors to the homepage.

See Rev. Proc. 75-50, as modified by Rev. Proc. 2019-22, for guidance on the format and content of the required notice and whether any exceptions may apply to you. 

A notice published in the legal notices section or classified advertisements of your local newspaper generally is not acceptable. 

Line 9a. If you answered “No,” to line 9, check the box on line 9a if you agree that you will publicize your nondiscriminatory policy in a way that meets the requirements of Revenue Procedure 75- 50, as modified by Revenue Procedure 2019-22. 

Line 11. Enter the racial composition of your student body, faculty, and administrative staff in the spaces provided. Enter actual numbers, rather than percentages, for the current year and projected numbers for the next academic year. If the number is zero, then enter “0.” 

If youre not operational, submit an estimate based on the best information available (such as the racial composition of the community you serve). 

Dont identify students, faculty, and staff by name. 

Line 12Enter the racial composition of students to whom you award loans and scholarships in the spaces provided. Enter actual numbers, rather than percentages, for the current year and projected numbers for the next academic year. If the number is zero, then enter “0.” If you wont provide any loans or scholarships, check the box provided. 

Dont identify students by name.  

If you complete line 12 indicating you do or will provide loans or scholarships, be sure your response to Part IV, line 15 is consistent with your response here. 

Line 13. Identify each of your incorporators, founders, board members, donors of land, and donors of buildings by name (whether individuals or organizations). 

Line 14. Answer “Yes,” if any individuals or organizations on your list have an objective to keep public or private school education segregated by race and explain how these individuals or organizations promote segregation in public or private schools. 

Line 15. Answer “Yes,” if on a continuing basis, you will maintain for a minimum period of 3 years the following records. 

  • Your racial composition (similar tothe information requested on Schedule B, line 11).
  • Evidence that your scholarships and loans are awarded on a racially nondiscriminatory basis (similar tothe information requested on Schedule B, line 12).
  • Copies of all materials used by you or on your behalf to solicit contributions.
  • Copies of brochures, application forms, advertisements, and catalogues dealing with student admissions, programs, and financial aid.

Answer “No,” if you dont maintain records and explain how you meet the recordkeeping requirements under Rev. Proc. 75-50. 

Failure to maintain these records or produce them upon the proper request will create a presumption that you havent complied with the requirements of Rev. Proc. 75-50. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”ScheduleC” css=”.vc_custom_1582307334527{padding-top: 40px !important;}”][vc_column][vc_column_text]Schedule C. Hospitals and Medical Research Organizations 

An organization qualifies as a hospital for purposes of classification under sections 509(a)(1) and 170(b)(1)(iii) if it is a: 

  • Hospital,
  • Medical research organization

operated in conjunction with a hospital, or 

  • Cooperative hospital service organization.

Hospital. An organization is a “hospital” if its principal purpose or function is providing medical or hospital care or medical education or research. Medical care includes treatment of any physical or mental disability or condition, on an inpatient or outpatient basis. Thus, if an organization is a rehabilitation institution, outpatient clinic, or community mental health or drug treatment center, it is a hospital if its principal function is providing treatment services, as described above. 

A hospital doesn’t include convalescent homes, homes for children or the aged, or institutions whose principal purposes or function is to train handicapped individuals to pursue a vocation. 

Medical research organization. An 

organization is a “medical research organization” if its principal purpose or function is the direct, continuous, and active conduct of medical research in conjunction with a hospital. The hospital with which the organization is affiliated must be described in section 501 (c)(3), a federal hospital, or an instrumentality of a governmental unit, such as a municipal hospital. 

“Medical research” means investigations, experiments, and studies to discover, develop, or verify knowledge relating to the causes, diagnosis, treatment, prevention, or control of human physical or mental diseases and impairments. For more information, see Regulations section 1.170A-9(c)(2). 

Cooperative hospital service organization. A cooperative hospital service organization performs one or more of the specific services listed below for one or more exempt hospitals on a cooperative basis. The services listed below are exclusive. A cooperative service organization that provides services other than those listed below, or that provides services to an organization other than an exempt hospital, doesnt qualify for exemption under section 501 (c)(3). The list of services includes: 

1.Data processing; 

2.Purchasing (including the purchasing of insurance on a group basis); 

3.Warehousing; 

4.Billing and collection (including the purchasing of patron accounts receivable on a recourse basis); 

5.Food; 

6.Clinical; 

7.Industrial engineering; 

8.Laboratory; 

9.Printing; 

10.Communications; 

11.Record center; and 

12.Personnel services (including selection testing, training, and education of personnel). 

Specific Line Items 

Line 1. Answer “Yes,” if your organization is a medical research organization, as described above. 

Line la. As a medical research organization, you must be associated with a hospital described in section 501(c)(3), a federal hospital, or an instrumentality of a government. Provide the name of the hospital(s) youre associated with and describe the relationship(s). 

Line 1 b. List your assets and their fair market value and the portion of your assets directly devoted to medical research. Dont complete the remainder of Schedule C. 

Line 2. Answer “Yes,” if youre a cooperative hospital service organization and describe the services you provide to your member hospitals and the exempt status of your membership. Dont complete the remainder of Schedule C. 

Line 3. Answer “Yes,” if all the doctors in your community are eligible for staff privileges at your facility. You must answer “Yes,” even if staff privileges at your facilities are limited by capacity, provided that all qualified medical professionals in your community may seek and would be considered for eligibility. 

Answer “No,” if all doctors in your community arent eligible for staff privileges at your facility. 

If you answer “No,” describe in detail how you limit eligibility for staff privileges at your facility. Include details of your eligibility criteria and selection procedures for your courtesy staff of doctors. 

Line 4. Answer “Yes,” if you admit all patients in your community who can pay for themselves or through some form of third-party reimbursement (for example, private health insurance, Medicare, or Medicaid). 

Answer “No,” if you limit admission for these individuals in any way and describe your admission policy in detail, including how and why you restrict patient admission. 

Line 5. Answer “Yes,” if you offer emergency medical or hospital care at your facility on a 24-hour basis, seven days a week. 

Line 5a. Answer “Yes,” if the reason you dont maintain a full-time emergency room is either because youre a specialty hospital where emergency care would be inappropriate for the services you provide or another emergency medical care facility that provides such services is located so near to you as to make such services as you might provide duplicative. 

Line 6. Answer “Yes,” if you provide free or low-cost medical or hospital care services. If you answer “Yes,” describe your policy and to whom you provide these services. Include details on how these services promote benefits to the community. For example, you may want to indicate how you determine who is eligible for the services, how you inform the general public about your policy, any requirements you require of patients to receive reduced cost or free care, and any agreements you might have with municipalities or government agencies to subsidize the cost of admitting or treating patients through this policy. 

Line 7. Answer “Yes,” if you have a formal program of medical training and research. If you answer “Yes,” describe your program, including the programs you offer, the scope of such programs, and affiliation with other hospitals or medical care providers with which you carry on the medical training or research programs. 

Line 8. Answer “Yes,” if you have a formal program of community educational programs and describe your programs, including the types of programs offered, the scope of the programs, and affiliation with other hospitals or medical care providers with whom you offer community educational programs. 

Line 9. Answer “Yes,” if you have a board of directors that is representative of the community you serve or if an organization described under section 501 (c)(3) with a community board exercises rights or powers over you. 

Answer “Yes,” if youre subject to a state corporate practice of medicine law that requires your governing board to be composed solely of physicians licensed to practice medicine in the state. 

Line 9a. List each board member by name and describe that persons relationship to you. Also, for each board member, describe if and how that individual represents the community. Generally, hospital employees and staff physicians arent individuals considered to be community representatives. If you operate under a parent organization whose board of directors isnt comprised of a majority of individuals who are representative of the community you serve, provide the requested information for your parent organization’s board of directors as well. 

Line 10. Section 501 (r). Answer “Yes,” if you operate a facility that is required by a state to be licensed, registered, or similarly recognized as a hospital. Organizations that respond “Yes,” to this question are required to meet additional requirements described in section 501 (r) to be considered a hospital exempt from taxation by section 501(c). 

Line 10a. A community health needs assessment (CHNA) is an assessment of the significant health needs of the community. To meet the requirements of section 501 (r)(3), a CHNA must take into account input from persons who represent the broad interests of the community served by the hospital facility, including those with special knowledge of or expertise in public health, and must be made widely available to the public. Each hospital facility must conduct a CHNA at least once every 3 years and adopt an implementation strategy to meet the community health need identified through such CHNA. 

Answer “Yes,” if the hospital facility conducted a complying CHNA in the current tax year or in either of the 2 immediately preceding tax years or if the hospital facility intends to conduct a CHNA before the end of its first 3-year period. 

Line 10b. A financial assistance policy (FAP), sometimes referred to as a charity care policy, is a policy describing how an organization will provide financial assistance at its hospital(s) and other facilities, if any. Financial assistance includes free or discounted health services provided to persons who meet the organizations criteria for financial assistance and are unable to pay for all or a portion of the services. Financial assistance doesnt include: 

  • Bad debt or uncollectible charges that the organization recorded as revenue but wrote off due to a patients failure to pay or the cost of providing such care to suchpatients;
  • The difference between the cost of care provided under Medicaid or other means-tested government programs or under Medicare and the revenue derivedtherefrom;
  • Self-pay or prompt pay discounts; or
  • Contractual adjustments with any third-party payors.

Answer “Yes,” if the hospital facility has adopted a written financial assistance policy and a written policy relating to emergency medical care as required by section 501 (r)(4). 

Line 10c. Under section 501 (r)(5), the maximum amounts that can be charged to FAP-eligible individuals for emergency or other medically necessary care are the amounts generally billed to individuals who have insurance covering such care. 

Answer “Yes,” if the hospital facility: 

1.Limits or will limit any charges to FAP-eligible individuals to whom the hospital facility provided emergency or other medically necessary services to not more than the amounts generally billed to individuals who had insurance covering such care; and 

2.Prohibits, or upon beginning operations will prohibit, the use of gross charges as described in section 501 (r)(5). 

  • The hospital facility may check “Yes,” if it charged more than the amounts generally billed to individuals who had insurance covering such care to an individual if The charge in excess of the amounts generally billed (AGB)wasnt made or requested as a pre-condition of providing medically necessary care to the FAP-eligible individual;
  • As of the time of the charge, the FAP-eligible individualhadnt submitted a complete FAP application andhadnt otherwise been determined by the hospital facility to be FAP eligible for the care; and, 

If the individual subsequently submits a complete FAP application and is determined to be FAP-eligible for care, the hospital facility refunds any amount that exceeds the amount he or she is determined to be personally responsible for paying as a FAP-eligible individual, unless such excess amount is less than $5. 

Line lOdAnswer “Yes,” if the hospital facility has, or will have at the beginning of operation, either a separate written billing and collections policy, or include in a written FAP: 

  • A description of any actions that the hospital facility (or other authorized party) may take related to obtaining payment of a bill for medical care, including, but not limited to, any extraordinary collection actions (ECAs);
  • The process and timeframesthe hospital facility (or other authorized party) uses in taking those actions (including, but not limited to, the reasonable efforts it will make to determine whether an individual is FAP-eligible before engaging in ECAs); and 
  • The office, department, committee, or other body with the final authority or responsibility for determining that the hospital facility has made reasonable efforts to determine whether an individual is FAP-eligible and may therefore engage inECAsagainst the individual. 

[/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”ScheduleD” css=”.vc_custom_1582307362267{padding-top: 40px !important;}”][vc_column][vc_column_text]Schedule D. Section 509(a)(3) Supporting Organizations 

Supporting organizations are described in section 509(a)(3). The term “supported organization” refers to an organization that a supporting organization benefits. A supporting organization may support more than one supported organization. 

An organization qualifies as a supporting organization (for purposes of classification under section 509(a)(3)) if: 

  • It is organized and at all times thereafter is operated exclusively for the benefit of, to perform the function of, or to carry out the purposes of one or more public charities described in section 509(a)(1) or 509(a)(2);
  • It meets one of three required relationship tests with the supported organization(s); and itisntcontrolled by “disqualified persons,” directly or indirectly. See Appendix C for a definition of a “disqualified person.” 

A supporting organization can also support the charitable purposes of organizations that are exempt under sections 501 (c)(4), (5), or (6). 

Specific Line Items 

Line 1. List the name, address, and EIN of each organization you support. 

Line 2. Answer “Yes,” if each supported organization has a letter from the IRS recognizing it as a public charity under section 509(a)(1) or 509(a)(2). 

Before you file your application, use Tax Exempt Organization Search on lRS.gov to confirm whether each of your supported organizations is currently recognized as exempt and is classified as a public charity. 

Line 2a. Answer “Yes,” if any supported organization you listed on line 1 received a letter from the IRS stating that its exempt under sections 501 (c)(4), (5), or (6) and meets the public support test under section 509(a)(2). See Pub. 557 for information on the public support test for section 509(a)(2). 

If you answer “No,” describe how each organization you support is a public charity under section 509(a)(1) or 509(a)(2). For example, if you support a church or foreign organization that hasnt received a determination letter recognizing it as a public charity, you should describe how this organization qualifies as a public charity under section 509(a)(1) or 509(a) (2). See Pub. 557 for information on public charities under sections 509(a)(1) and 509(a)(2). 

Line 3. Relationship test. To qualify under section 509(a)(3), you must show that you meet one of three relationship tests with your supported organization(s). Select the option that best describes your relationship with your supported organization(s). 

  • Type I (“operated, supervised, or controlled by” relationship;comparable to a parent-subsidiary relationship): A majority of your governing board or officers are elected or appointed by the governing body, members of the governing body, officers acting in their official capacity, or the membership of your supported organization(s).
  • Type II (“supervised or controlled in connection with” relationship;comparable to a brother-sister relationship): Your control or management is vested in the same persons who control or manage your supported organization(s). 
  • Type III (“operated in connection with” relationship;responsive to the needs or demands of, and having significant involvement in the affairs of, the supported organization(s)): One or more of your officers, directors, or trustees are elected or appointed by the officers, directors, trustees, or membership of your supported organization(s); one or more of your officers, directors, trustees, or other important office holders are also members of the governing body of your supported organization(s); or your officers, directors, or trustees maintain a close and continuous working relationship with the officers, directors, or trustees of your supported organization(s). 

If you don’t meet one of these three relationship tests, you aren’t described in section 509(a)(3) and should review the other foundation classification options in Part VII, line 1. 

Line 4. Describe how your governing board and officers are selected, including where (if applicable) this information is in your governing document, bylaws, or other internal rules and regulations. 

Type III organizations must also describe how your officers, directors, or trustees maintain a close and continuing relationship with the officers, directors, or trustees of your supported organization(s). 

Line 5. Prohibited control by disqualified person. You cant be described in section 509(a)(3) if youre directly or indirectly controlled by disqualified persons. You are controlled if disqualified persons: 

  • Can exercise 50% or more of the total voting power of your governingbody;
  • Have authority to affect significant decisions, such as power over your investment decisions, or power over your charitable disbursement decisions; or
  • Can exercise veto power over your actions.

Although control is generally demonstrated where disqualified persons have the authority over your governing body to require you to take an action or refrain from taking an action, indirect control by disqualified persons will also disqualify you as a supporting organization. 

See Appendix C for a description of the terms “disqualified person,” “family,” “foundation manager,” and “business relationship.” 

Public charities and foundation managers who otherwise are disqualified persons only because they are foundation managers aren’t disqualified persons for this purpose. 

Line 7. Organizational test. If you answered “No,” you are a Type III supporting organization, you must amend your organizing document to specify your supported organization(s) by name; or you wont meet the organizational test under section 509(a)(3) and need to reconsider your requested public charity classification in Part VII, line 1. 

Line 7a. If you answered “No,” you wont meet the organizational test under section 509(a)(3) unless you amend your organizing document to specify your supported organization(s) by name, purpose, or class, and need to reconsider your requested public charity classification in Part VII, line 1. 

Line 8. When responding to this question, dont include donors that are section 509(a)(1), (2), or (4) organizations. 

This prohibition on contributions from controlling donors only applies to Type I and Type III supporting organizations. 

Line 9. Type III responsiveness test. 

Answer “Yes,” if, because of your relationship described in line 3, the supported organization has a significant involvement in your investment policies, making and timing of grants, and directing the use of your income and assets, and explain how your supported organization is involved in these matters. 

Line 10. Type III notification requirement. A Type III supporting organization must provide the notice described in this question. If youre a Type III supporting organization, youll be required to answer this question annually on your annual information return (Schedule A of Form 990 or 990-EZ). 

Lines 11-13. Type III integral part test. 

An organization seeking classification as a Type III supporting organization must meet an integral part test, which is satisfied by maintaining significant involvement in the operations of one or more supported organizations and providing support on which the supported organization(s) are dependent. A Type III supporting organization may be functionally integrated (lines 11-12) or non-functionally integrated (lines 13 and 13a-c) depending on the manner in which it meets the integral part test. Functionally integrated Type III supporting organizations are subject to fewer restrictions and requirements than non-functionally integrated Type INI supporting organizations. 

Line 11. Answer “Yes,” if youre the parent of all your supported organizations because you: 

  1. Have the power to appoint or elect, directly or indirectly,a majority ofthe officers, directors, or trustees of each supported organization; and  
  2. Exercise a substantial degree of direction over the policies, programs, and activities of each supported organization.

For example, N, an organization described in section 501 (c)(3), is the parent organization of a healthcare system consisting of two hospitals (Q and R) and an outpatient clinic (S), each of which is described in section 509(a)(1), and a taxable subsidiary (T). N is the sole member of each of Q, R, and S. Under the charter and bylaws of each of Q, R, and S, N appoints all members of the board of directors of each corporation. N engages in the overall coordination and supervision of the healthcare systems exempt subsidiary corporations Q, R, and S in approval of their budgets, strategic planning, marketing, resource allocation, securing tax-exempt bond financing, and community education. N also manages and invests assets that serve as endowments of Q, R, and S. 

Line 12. Answer “Yes,” if you conduct activities that the supported organization would otherwise need to conduct in furtherance of its exempt purposes and describe the activities that you conduct. 

Holding title to and managing assets that are used (or held for use) directly in carrying out the exempt purposes of your supported organization (exempt-use assets) are activities that directly further the exempt purposes of your supported organization. Conversely, with certain exceptions, fundraising, making grants (whether to the supported organization or to third parties), and investing and managing non-exempt-use assets arent activities that directly further the exempt purposes of the supported organization. See Regulations section 1.509(a)-4(i)(4) (ii) for more information. 

Line 13. To satisfy the integral part test as a non-functionally integrated supporting organization, you must distribute at least 85% of your annual net income or 3.5% of the aggregate fair market value of all of your non-exempt-use assets (whichever is greater) to your supported organization(s). You can use Part V of Schedule A (Form 990 or 990-EZ) to help determine your answer to this question. 

The distributable amount for the first tax year an organization is treated as a non-functionally integrated Type III supporting organization is zero. 

For purposes of this line, “net income” has the same meaning as the term “adjusted net income.” In general, “adjusted net income” is the excess of gross income, including gross income from any unrelated trade or business, determined with certain modifications, reduced by total deductions. Gross income doesnt include gifts, grants, or contributions. See Appendix C. 

For purposes of this line, “non-exempt-use assets” are all assets of the supporting organization other than: 

1.Assets described in Regulations section 53.4942(a)(2)(c)(2)(i) through (iv), and 

2.Exempt-use assets, which are assets that are used (or held for use) directly in carrying out the exempt purposes of your supported organization. See Regulations section 1.509(a)-4(i)(8) for more information. 

Line 13a. List the total amount you distribute(d) annually to each supported organization. Also, indicate how each amount will vary from year to year. 

Line 13b. List the total annual income for each supported organization. If you distribute your income to, or for the use of, a particular department or program of an organization, list the annual revenue of the supported department or program. 

Line 13c. Answer “Yes,” if your funds are “earmarked” for a particular program or activity conducted by your supported organization. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”ScheduleE” css=”.vc_custom_1582307388272{padding-top: 40px !important;}”][vc_column][vc_column_text]Schedule E. Effective Date 

The questions in this schedule will help us determine the effective date of exemption if youre either seeking reinstatement after automatic revocation or youre filing this application more than 27 months after the end of the month in which you were legally formed. 

Specific Line Items 

Line 1. Answer “Yes,” if your exempt status was automatically revoked under section 6033(j)(1) for failure to file required annual returns or notices for 3 consecutive years and youre applying for reinstatement. 

Rev. Proc. 2014-11,2014-3 I.R.B. 411, at IRS.gov/irb/2014-03 IRB establishes several different procedures for reinstating an organizations exempt status depending upon its size, the number of times its been automatically revoked, and the timeliness of filing for reinstatement. Review the revenue procedure to determine which section applies to you. 

Line la. Select the section of Rev. Proc. 2014-11 under which youre applying for reinstatement. 

Section 4. Select this section if: 

  • You were eligible to file either Form 990-EZ or Form 990-N for each of the 3 consecutive years that you failed tofile;
  • This is the first time youvebeen automatically revoked pursuant to section 6033(j)(1); and Youre submitting this application no later than 15 months after the later of the date of your Revocation Letter or the date on which the IRS posted your name on the Auto-Revocation List at

apps. irs. gov/app/eos/. 

By selecting this item, youre also attesting that your failure to file wasnt intentional and youve put in place procedures to file required returns or notices in the future. 

If you were classified as a private foundation prior to your automatic revocation, you weren’t eligible to file either Form 990-EZ or Form 990-N and, therefore, aren’t eligible to request reinstatement under Section 4. 

If your exempt status was automatically revoked more than once, youre not eligible for reinstatement under Section 4; however, you may apply for reinstatement under Section 5, Section 6, or Section 7. 

Section 5. Select this section if: 

  • Youre ineligible to file for reinstatement under Section 4, and
  • Youre submitting this application not later than 15 months after the later of the date of your Revocation Letter or the date on which the IRS posted your name on the Auto-Revocation List at apps. irs.gov/app/eos/.

By selecting this item, youre also attesting that you filed the required annual returns, your failure to file was not intentional, and you have put in place procedures to file required returns or notices in the future. 

Describe how you exercised ordinary business care and prudence in determining and attempting to comply with your filing requirements in at least 1 of the 3 years of revocation. Include a detailed explanation of all the facts and circumstances that led to the failure, the discovery of the failure, and the steps you have taken or will take to avoid or to mitigate future failures to file timely returns or notices. 

Section 6. Select this section if you are applying for reinstatement of your tax-exempt status more than 15 months from the later of the date of the Revocation Letter or the date on which the IRS posted your name on the Auto-Revocation List at apps. irs. gov/app/eos/. 

By selecting this item, youre also attesting that you filed the required annual returns, your failure to file wasnt intentional, and you have put in place procedures to file required returns or notices in the future. 

Describe how you exercised ordinary business care and prudence in determining and attempting to comply with your filing requirements in each of the 3 years of revocation. Include a detailed explanation of all the facts and circumstances that led to the failure, the discovery of the failure, and the steps you have taken or will take to avoid or mitigate future failures to file timely returns or notices. 

Section 7. Select this section if youre seeking reinstatement with an effective date of reinstatement of the date of submission of this application. 

Line 2. Generally, if you didnt file Form 1023 within 27 months of formation, the effective date of your exempt status will be the date you filed Form 1023 (submission date). We may grant requests for an earlier effective date when theres evidence to establish you acted reasonably and in good faith, and the grant of relief wont prejudice the interests of the government. 

Select the appropriate box to indicate whether you accept the submission date as the effective date of your exempt status or whether you are requesting an earlier effective date. 

Line 2a. You may be eligible for consideration for relief from the requirement that you file Form 1023 within 27 months of formation if you can establish that you acted reasonably and in good faith, and that granting an extension wont prejudice the interests of the government. 

Describe in detail your reasons for filing late, how you discovered your failure to file, any reliance on professional advice or advice from the IRS, and any other information you believe will support your request for relief. Also, you may want to provide a comparison of (1) what your aggregate tax liability would be if you had filed this application within the 27-month period with (2) what your aggregate liability would be if you were exempt as of your formation date. 

We may consider the following factors. 

  • You filed Form 1023 before we discovered your failure to file.
  • You failed to file because of intervening events beyond your control.
  • You exercised reasonable diligence, but youwerent aware of the filing requirements. (The complexity of your filing and experience in these matters may be taken into consideration.)
  • You reasonably relied on written advice from us.
  • You reasonably relied on the advice of a qualified tax professional who failed to file or advise you to file Form 1023. 

[/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”ScheduleF” css=”.vc_custom_1582307409314{padding-top: 40px !important;}”][vc_column][vc_column_text]Schedule F. Low-Income Housing

To qualify for tax exemption, low-income housing must provide affordable housing for a significant segment of individuals in your community with low incomes. Your low-income housing may serve a combination of purposes, such as for poor, frail, and elderly persons. 

Specific Line Items 

Line 1. The “type” of facility may be an apartment complex, condominium, cooperative, or private residence, etc. 

Line 6. Answer “Yes,” if you charge daily, weekly, monthly, or annual fees or maintenance charges. 

Line 8. Government programs include federal, state, or local government programs. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”ScheduleG” css=”.vc_custom_1582307423770{padding-top: 40px !important;}”][vc_column][vc_column_text]Schedule G. Successors to Other Organizations 

You should consider this schedule as a successor organization if any of the following situations pertain to you. 

  • You took or will take over activities previously conducted by another organization.
  • You took or will take over 25% or more of thefair market valueof the net assets of another organization. 
  • You were established upon the conversion of an organization fromfor-profit to non-profit status. 

The other organization is the predecessor organization. You should complete this schedule regardless of whether the predecessor (other organization) was exempt or not exempt from federal income tax. 

For purposes of this schedule, a “for-profit” organization is one in which persons are permitted to have an ownership or partnership interest, such as corporate stock. It includes sole proprietorships, corporations, and other entities that provide for ownership interests. [/vc_column_text][/vc_column][/vc_row][vc_row triangle_shape=”no” el_id=”ScheduleH” css=”.vc_custom_1582307484235{padding-top: 40px !important;}”][vc_column][vc_column_text]Schedule H. Organizations Providing Scholarships, Fellowships, Educational Loans, or Other Educational Grants to Individuals and Private Foundations Requesting Advance Approval of Individual Grant Procedures 

Complete this schedule if you provide scholarships, fellowships, grants, loans, or other distributions to individuals for educational purposes. When answering the questions on this schedule, you should demonstrate how these distributions further your exempt purposes. 

If youre a private foundation, youre subject to the rules under section 4945 and may incur an excise tax if you make grants for the purpose described above without seeking advance approval of your grant-making procedures (see Schedule H-Section II). 

Generally, distributions made to individuals may advance educational purposes if selection is made: 

  • In a non-discriminatory fashion in terms of racialpreference;
  • Based on need and/or merit; and
  • To a charitable class in terms of being available to an open-ended group, rather than to pre-selected individuals.

A scholarship or fellowship is tax free to the recipient only if he or she is a candidate for a degree at an eligible educational institution and uses the scholarship or fellowship to pay qualified education expenses. 

Qualified education expenses include tuition and fees; and course-related expenses such as books, supplies, and equipment. Room and board, travel, research, clerical help, and non-required equipment arent qualified education expenses. See Pub. 970, Tax Benefits for Education, for additional information. 

Selection of individuals using a lottery system generally hasnt been approved by the IRS. 

Specific Line Items 

Section I 

Line 1. If you conduct more than one grant program, describe each program separately.  

If you make educational loans, describe the terms of the loan (for example, the factors you consider in selecting or approving loan recipients, interest rate, duration, forgiveness provision, etc.). Also, describe whether any financial institutions or other lenders are involved in your program. 

Explain how you will publicize your program and whether you publicize to the general public or to another group of possible recipients. Include specific information about the geographic area in which your program will be publicized and the means you will use, such as through newspaper advertisements, school district announcements, or community groups. 

Line 2. Organizations that make grants to individuals must maintain adequate records and case histories showing the name and address of each recipient, pursuant Rev. Rul. 56-304, 1956-2 C.B. 306 but dont provide this information as part of your application. 

Section II 

If you requested public charity classification in Part VII, line 1, dont complete Schedule H – Section II. 

Line 1. Answer “Yes,” if youre a private foundation and youre requesting advance approval of your grant-making procedures under section 4945(g). 

Answer “No,” if youre a private foundation but dont wish to request advance approval of your grant-making procedures under section 4945(g). If you answer “No” the amounts you distribute as educational grants provided to individuals may be considered taxable expenditures under section 4945. 

For more information about advance approval of grant-making procedures of a private foundation, go to IRS.gov/charities-non-profit/private-foundations/advance-approval-of-grant-making- 

procedures. 

Line la. Check the box for section “4945(g)(1)” if your award qualifies as a scholarship or fellowship grant thats awarded on an objective and nondiscriminatory basis and is used for study at a school (see Schedule B for what is considered a school). 

Check the box for “4945(g)(3)” if the purpose of your award is to achieve a specific objective, produce a report or other similar product, or improve or enhance a literary, artistic, musical, scientific, teaching, or other similar capacity, skill, or talent of the recipient. Include your educational loan program under this section. 

You may check more than one box. 

 If your award qualifies as a prize or award that is subject to the provisions of section 74(b) and your recipient is selected from the general public, you dont have to request advance approval of your grant-making procedures since a prize or award isnt subject to the advance approval procedure requirements because it isnt a grant for travel, study, or other similar purposes. See Rev. Ruls. 77-380, 1977-2 C.B. 419; 76-460, 1976-2 C.B. 371; and 75-393, 1975-2 C.B. 451. 

Line 4. Answer “Yes,” if you award scholarships on a preferential basis because you require, as an initial qualification, that the individual be an employee or be related to an employee of a particular employer. 

Line 7. For purposes of this schedule, a program for children of employees of a particular employer includes children and family members of employees. [/vc_column_text][/vc_column][/vc_row]

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