Schedule L, Part III discusses grants and assistance benefiting interested persons (IPs). The definition used for IPs is the same as that used in Part II, with a couple additions:
- A member of your organization’s grant selection committee
- An employee, or child of an employee, of a substantial contributor or of a 35% controlled entity of a substantial contributor. This is only if the employee or child got the grant or assistance based on the direction or advice of the substantial contributor or designee of the 35% controlled entity, or as part of a program funded by the substantial contributor that’s intended to benefit such employees or their children.
Report any grants and other assistance provided to IPs during the fiscal year you’re reporting on you Form 990. This may include goods, services, use of facilities, scholarships, fellowships, discounts on goods or services, prizes, awards, and the gift portion of transactions that are part sale and part gift. There are a handful of exceptions that don’t need to be reported in Part III:
- Excess benefit transactions reported in Part I
- Loans reported, or not required to be reported, in Part II
- Business transactions that don’t contain any elements of being a gift and that you only engage in to meet your direct and immediate needs, such as compensation to employees and independent contractors who provide services of comparable value. Some of these transactions will be reportable in Part IV.
- Compensations to persons listed in Form 990, Part VII, Section A
- Grants to employees, and their children, of substantial contributors and related 35% controlled entities, if the grants were awarded on an objective and nondiscriminatory basis based on pre-established criteria and reviewed by a selection committee, as described in Regulations section 53.4945-4(b)
- Grants and assistance provided to IPs who are part of the charitable class that your organization serves as part of its exempt purpose, if they are provided on similar terms as provided to other members of the charitable class, e.g. disaster relief or poverty relief. These grants and assistance are not exempt from reporting if they are for travel, study (e.g. scholarships and fellowships), or similar purposes, such as to produce a report, or to improve or enhance a literary, artistic, musical, scientific, or similar capacity, skill, or talent of the grantee, or if the grants are awards that recognize past achievements
- Grants and assistance to 501(c)(3) organizations
In column (a), enter the name of the IP who benefited from the grant or assistance. If the IP is a substantial contributor, or a contributor’s family member, a 35% controlled entity of a contributor, or employee of such an entity or the contributor, then put “substantial contributor” or “related to substantial contributor.” This protects the confidentiality of the contributor. (Remember: the names and addresses of contributors are redacted from the publicly available version of your Schedule B and other schedules that draw from this information.)
In column (b), enter the relationship between the IP and your organization, such as “spouse of director John Smith.” If it’s a substantial contributor, put “substantial contributor” here. If you put “related to substantial contributor” in column (a), describe the relationship without using anyone’s name, e.g. employee of 35% controlled entity of substantial contributor.” If an IP is a substantial contributor or related to one, and also meets another criteria for being an IP, use the latter criteria and don’t reference his/her status of, or relationship to, the substantial contributor. E.g. if Jane Doe is a substantial contributor and also married to director John Doe, list her name in column (a) and “spouse of director John Doe” in column (b).
In column (c), put the total amount of grants and assistance provided to IPs during the fiscal year you’re reporting on. In columns (d) and (e) respectively, put the type of assistance and its purpose.
Schedule L can be found here, and more detailed instructions for filling it out are provided here. I covered Part I and Part II in previous posts, and will cover Part IV in a future post.