Issue

Form 990 is an annual information return required by many Christian colleges.  In too many instances, we see “shoddy” information reporting on this form which may lead potential donors – and maybe potential students – to ignore your institutions.

Situation

Troas Bible College (TBC) is a higher education institution that is exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).   TBC files Form 990, Return of Organization Exempt From Income Tax, each year.  They like to try and get the return done as fast as possible and filed with the IRS.  On Form 990, Part III, Line 4a they report the following:  “Christian college”.  That’s all.  As we work with them to prepare their form for the current tax year, we advise that it would be a wise, best practice to expand that narrative to include more of an “infomercial” about the school.  Pulling information from the “About” section of your website is generally a good idea.  Involve your Development and/or Marketing team.  Include impressive statistics about numbers of students and graduates.  This is TBC’s opportunity to put their best foot forward to potential students, possible donors, alumni, the press, and the myriad other readers of their Form 990.

Rules

From the 2015 Form 990, Part III, Line 4 instructions (page 11):

Lines 4a–4c. All organizations must describe their accomplishments for each of their three largest program services, as measured by total expenses incurred (not including donated services or the donated use of materials, equipment, or facilities). If there were three or fewer of such activities, describe each program service activity. The organization can report on Schedule O (Form 990 or 990-EZ) additional activities that it considers of comparable or greater importance, although smaller in terms of expenses incurred (such as activities conducted with volunteer labor).

Description of program services. For each program service reported, include the following.

  • Describe program service accomplishments through specific measurements such as clients served, days of care provided, number of sessions or events held, or publications issued.
  • Describe the activity’s objective, for both this time period and the longer-term goal, if the output is intangible, such as in a research activity.
  • Give reasonable estimates for any statistical information if exact figures are not readily available. Indicate that this information is estimated.
  • Be clear, concise, and complete in the description. Use Schedule O (Form 990 or 990-EZ) if additional space is needed.

Donated services or use of equipment, materials, or facilities. The organization can report the amount of any donated services, or use of materials, equipment, or facilities it received or used in connection with a specific program service, on the lines for the narrative description of the appropriate program service. However, do not include these amounts in revenue, expenses, or grants reported on Part III, lines 4a–4e, even if prepared according to generally accepted accounting principles.

Bottom Line

Consult with a qualified tax advisor and get their guidance and assistance when you are preparing to file your annual Form 990.  It is not just about filing a timely, complete, and accurate return – it is about thoughtfully putting your college in the best light possible.

Specific questions? Email Dave Moja.

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.