One annual responsibility of nonprofits is filing a Form 990 with the IRS, detailing the financial activities of the organization in the last fiscal year. Along with the form itself comes a number of schedules to provide supplemental information about specific types of activities, such as lobbying, fundraising events, and, in the case of Schedule F, foreign activity. Nonprofits must file this schedule if they have $10,000 or more of revenue or expenses in a fiscal year. The schedule is fairly straightforward, but there are a couple tricks to knowing which expenses need to be reported, which I’ll cover in this post.
First off, filing Schedule F can be triggered by hitting the $10,000 threshold of either revenue or expenses, but only expenses get reported. It’s possible to have $10,000 of foreign revenue, $0 of foreign expenses, and have to file the schedule with only minimal information on it. Because of this, you have to track all foreign revenue, whether from donations, fee-for-service work, individuals or organizations sponsoring or registering to attend an event you’re hosting, or from any other source.
In some cases, you may host an event that is partly managed by an organization in the host country. For example, if you do work in Canada, the financial activity must all run through an organization based in Canada. In this case, all of the revenue and expenses are considered foreign activity, and you need to know both the gross revenue and gross expenses – just knowing the net proceeds isn’t sufficient. In the case of a fundraising event, you need a more detailed breakout of income and expenses, since it will be reported on Schedule G.
Which expenses need to be tracked and reported as foreign activity? It’s largely determined by where the expense is “based,” or where it occurs – in the US, or outside of it. Staff or consultants based on the US are considered domestic expenses, even if they spend time in a foreign country, and their salaries and benefits for time spent outside the US don’t need to be reported. For staff and consultants based outside the US, all of their time needs to be reported. Airfare for travel to and from a foreign country are not reported, but in-country expenses, e.g. hotels and meals, are reported. Shipping items from the US, to another country, are not reported, but shipping costs back to the US are reported. Grants to a foreign individual or organization are reported on Schedule F. (You also need to track domestic grants, but those are reported elsewhere, on Schedule I.)
It can be a little tricky, but pay attention to where the expense is originating to determine if you need to report it. Anything originating in the US is domestic activity, and originating elsewhere is foreign.
Aside from grants, you don’t have to report a lot of detail on Schedule F – just the total dollar amount in each region of the world, the type(s) of activities you carry on, and the number of staff and offices you maintain there, if any. For grants, you report each recipient, the dollar amount, and what the grant is for. All grants of $5,000 or more are reported, even if they are non-cash grants.