Demystifying the 990-PF
Understanding the information return U.S. private foundations file with the Internal Revenue Service.
What is the 990-PF?
The 990-PF is the information return U.S. private foundations file with the Internal Revenue Service. This public document provides fiscal data for the foundation, names of trustees and officers, application information, and a complete grants list.
The 990-PF may be the only source where one will find complete grants lists for smaller and mid-sized foundations. Larger foundations often issue annual reports, which provide descriptions of the grants awarded during the year for which the return is filed, and many have web sites.
The typical IRS filing deadline for most foundations is four and a half months after the end of the foundation's fiscal year. It then takes another few months for the IRS to process and scan the 990-PFs into a digitized format. So, if a foundation's fiscal year ended on December 31, 2009, its Form 990-PF would, in all likelihood, become available sometime in the fall of 2010. Of course, foundations can also request a filing extension from the IRS, which can lead to further delays in the 990-PF becoming publicly available.
Form 990-PF is public information. As such, private foundations must make the return available for public inspection. According to regulations, private foundations are required to provide, at a reasonable fee, photocopies of their three most recent tax returns to anyone who requests them in person or in writing. Requested copies of the Form 990-PF are required to be made available on a same-day basis for walk-in requests, and within 30 days for mail-in requests. Hard copies of 990-PFs may also be requested from the Internal Revenue Service, or from a state's charity office.
These disclosure requirements are waived, however, for private foundations that make the documents widely available through the Internet. Next we will explore sources for quickly finding these documents online.
Anatomy of Form 990-PF
The Initial Page
Below is the top portion of the initial page of the 990-PF for the Chandhok Charitable Trust in Louisiana. We see that this is the return for the calendar year 2008. Calendar year means January 1 through December 31 of that year. If the tax preparer leaves "calendar year or tax year" blank on the form, you can assume the foundation works from a calendar year. If the foundation has a fiscal year other than the calendar year, the preparer will fill in the months that the tax year begins and ends.
The initial page of the 990-PF also includes the foundation's current name and address. Grantseekers sending out proposals should always check to see that they have the most current address. To the right of the name/address field is a box for the foundation's EIN (Employer Identification Number). This is a unique number assigned by the IRS to each foundation, much like a person's social security number. Even if the foundation's name changes, its EIN remains the same.
Just under the EIN box is a space for the foundation's telephone number. Many foundations do not list telephone numbers because they do not have staff members available to answer their telephone.
Tip: If the telephone number is not listed on page 1, it may be found on page 5, line 14.
In Section I, we find the fair market value of the foundation's assets at the end of the year. Assets are certainly one way of evaluating the size of a foundation. In general, a private foundation must meet or exceed an annual payout requirement of 5% of the average market value of its assets.
Tip: If the box in section I is left blank, the amount of total assets can also be found on page 2, line 16, column C.
Part I, Line 1 provides the amount of contributions, gifts or grants the foundation received during the year. This might be of interest to grantseekers, particularly if it indicates a drastic increase in foundation assets from the previous year. Such a jump may be due to a sudden increase of wealth for the foundation's donor, or perhaps when it follows the death of the donor, who earmarked a sizable portion of his estate to the foundation. According to this return, the total amount of contributions, gifts or grants received by the Chandhok Charitable Trust during 2008 totalled $15,650.
Part I, Line 25, column D provides the amount of contributions, gifts, and grants paid by the foundation during the year. This figure is for actual monies paid in grants for the year of filing. It does not include grants authorized, but not paid in the year of filing. Grants in column A are grants authorized for the year of filing, but not necessarily paid. In most cases, the two columns report the same figure, and occasionally, column D may be blank. On the above form, we see that during 2008, the Chandhok Charitable Trust awarded grants totalling $8,787.64.
Tip: The figure in column D is used in Foundation Center directories when reporting a foundation's total giving.
Tip: Pay attention to the date stamps--when the 990-PF was received by the IRS and when it was scanned. If you are looking for this foundation next year, those dates will give you a good sense of when it files (and, by extension, when you might expect its return to show up online).
Pages 6 and 7
Page 6 of the return provides the list of officers, directors, trustees, and foundation managers. This page is the key to finding out who is running the foundation, and making decisions about grant proposals. If the 'officers' section gives addresses other than the foundation address, this could be important to grantseekers wishing to gather biographical information on an individual. Sometimes, an individual's home address or work address can be identified here.
Section 2 provides information on the compensation of the foundation's highest paid employees. This information is often useful to grantmakers who need to determine how their foundation compares to similarly-sized foundations.
Section 3 (on page 7) provides information on the type of service and compensation of independent contractors. To make comparative analyses, financial services firms that assist grantmakers are often interested in fees paid to outside contractors.
Note that page 7 also includes information on direct charitable activities, programs run by the foundation.
Page 10, Part XV
This section provides information about the procedure for submitting applications to the foundation. Here grantseekers can identify to whom the application should be addressed, the type of application that is required, submission deadlines, restrictions and limitations.
Note box #2 that reads, "Check here if the organization only makes contributions to preselected charitable organizations and does not accept unsolicited requests for funds." If this box is checked, this foundation may not be a good prospect for grant funding.
Section d outlines any specific restrictions or limitations on grants by geographic area, fields of interest, types of institutions, or other factors.
This page of the return provides a complete grants list. Note that while grantee addresses and a brief description of the grant is requested by the IRS on the form, in many cases all you'll see is a listing of recipient names and dollar amounts of grants.
If you are researching one of the larger foundations, you won't necessarily have to work with a 990-PF in order to study a grants list or review basic financial data. The larger foundations often have web sites, and/or issue annual reports. Foundation web sites and annual reports often provide a description of the grant in cases where the 990-PF does not.
Tip: Sometimes the statement "see attached" is written on page 11. If this is the case, then look toward the end of the return for the schedule of grants.
Tip: Check to see if the foundation has provided any grant listings in part B, "Approved for future payment". If so, then you potentially have two years' worth of grants in one 990-PF.
Glossary of Terms
Annual report: A voluntary report issued by a foundation or corporation that provides financial data and descriptions of its grantmaking activities. Annual reports vary in format from simple typewritten documents listing the year's grants to detailed publications that provide substantial information about the grantmaker's grantmaking programs.
Assets: The amount of capital or principal - money, stocks, bonds, real estate, or other resources -controlled by a foundation or corporate giving program. Generally, assets are invested and the resulting income is used to make grants.
Distribution committee: The committee responsible for making grant decisions. For community foundations, the distribution committee is intended to be broadly representative of the community served by the foundation.
Donee: The recipient of a grant. (Also known as the grantee or the beneficiary.)
Donor: An individual or organization that makes a grant or contribution to a donee. (Also known as the grantor.)
Expenditure responsibility: In general, when a private foundation makes a grant to an organization that is not classified by the IRS as a "public charity," the foundation is required by law to provide some assurance that the funds will be used for the intended charitable purposes. Special reports on such grants must be filed with the IRS. Most grantee organizations are public charities and many foundations do not make "expenditure responsibility" grants.
501(c)(3): The section of the tax code that defines nonprofit, charitable (as broadly defined), tax-exempt organizations; 501(c)(3) organizations are further defined as public charities, private operating foundations, and private non-operating foundations. See also operating foundation; private foundation; public charity.
Form 990-PF: The public record information return that all private foundations are required by law to submit annually to the Internal Revenue Service.
Payout requirement: The minimum amount that private foundations are required to expend for charitable purposes (including grants and, within certain limits, the administrative cost of making grants). In general, a private foundation must meet or exceed an annual payout requirement of five percent of the average market value of its total assets.
Program officer: A staff member of a foundation who reviews grant proposals and processes applications for the board of trustees. Only a small percentage of foundations have program officers.
Qualifying distributions: Expenditures of a private foundation made to satisfy its annual payout requirement. These can include grants, reasonable administrative expenses, set-asides, loans and program-related investments, and amounts paid to acquire assets used directly in carrying out tax-exempt purposes.
Set-asides: Funds set aside by a foundation for a specific purpose or project that are counted as qualifying distributions toward the foundation's annual payout requirement. Amounts for the project must be paid within five years of the first set-aside.
Trustee: A foundation board member or officer who helps make decisions about how grant monies are spent. Depending on whether the foundation has paid staff, trustees may take a more or less active role in running its affairs.