The Form 990 requires more detail on specific financial statement items. The information is disclosed on Schedule D. The following are areas for which additional disclosure is required:
- Donor-advised and similar funds
- Conservation easements
- Collections of art, historical treasures, or similar assets
- Trust, escrow, and custodial arrangements
- Endowment funds
- Land, buildings, and equipment
- Investments - Other securities
- Investments - Program-related
- Other assets detail (assets included in Part X, line 15)
- Other liabilities (liabilities included in Part X, line 25)
- Disclosure of the FIN 48 footnote from the financial statements, if any
Donor-Advised and Similar Funds
Donor-advised funds are (1) separately identified by reference to contributions of a donor or donors, (2) owned and controlled by the nonprofit, and (3) for which the donor or donor adviser has advisory privileges in distribution or investment of the amounts held in the account. Similar funds are those that do not meet all three of the above qualifications, but are similar. Examples are a fund or an account that makes distributions only to a single, identified organization or one in which the donor or donor adviser gives advice as to which individuals receive grants, if the donor gives advice as a member of a committee.
Trust, Escrow, and Custodial Arrangements
This section must be completed by organizations acting as an agent, trustee, custodian, or other intermediary for funds payable to other organizations or individuals. These would be funds that are not on the organization's balance sheet. For example, it would apply if you are a custodian of an account for another nonprofit.
Endowment Funds
Organizations maintaining endowment funds are required to provide information regarding the amounts of the funds, expenses incurred related to the funds, and what types of funds are held. Your organization should look to SFAS 117, paragraph 14 through paragraph 17, for the definition of endowment funds.
Temporarily restricted endowments are endowment funds maintained to provide a source of income for either a specified period of time or until a specific event occurs. Permanent (true) endowments are endowment funds maintained to provide a permanent source of income, with the stipulation that the principal must be invested and kept intact in perpetuity (only the income generated can be used by the organization). Quasi-endowments (board designated) are funds functioning as endowments that are established by the organization itself and must retain the purpose and intent as specified by the donor or source of the original funds.
Land, Buildings, and Equipment
This section discloses the cost, depreciation, and book value of these items by category. No asset-by-asset reporting is required.
Investments - Other Securities
In completing Part X of Form 990 (balance sheet), you need to be diligent in reporting investments in their proper categories. On Schedule D, you are required to disclose additional information regarding "Investments in Other Securities." This refers to securities that are not publicly traded. An example would be an investment in stock of a closely held company. The detail on Schedule D is required if the balance sheet amount is 5 percent or more of the total assets. No asset-by-asset reporting is required; reporting is by asset types.
Investments - Program Related
Program related investments are investments made primarily to accomplish the organization's exempt purposes rather than to produce income. An example is interest collected on student loans by an organization whose exempt purpose is to make student loans. Again, asset-by-asset reporting is not required. Schedule D requires a description of the investment type, the book value, and the method of valuation.
Other Assets
A description of "Other Assets" reported on the balance sheet is required if line 15 of Part X is 5 percent or more of total assets.
Other Liabilities
If any amount is reported in Part X, line 25, the organization is required to separately report the liabilities on Schedule D. This includes liabilities for federal income taxes as well as amounts owed to related organizations.
Reconciliations
Finally, Schedule D now includes the reconciliation of the change in net assets, reconciliation of revenue per audited financial statements with revenue per return and reconciliation of expenses per audited financial statements with expenses per return.
Please contact your SS&G representative with any questions.