Nonprofit organization reporting of non-cash donations
Non-cash contributions can be an important form of support for many nonprofit organizations. These non-cash contributions can range from publicly traded stocks, vehicles, real estate, clothing, equipment to medical supplies but do not include donations of services or use of facilities. The organization is required to report non-cash donated items even if the items are sold immediately after they are received. If the organization is a public charity, these donations are included in their public support test.
Schedule M needs to be prepared if one of the following questions on the main form 990 is answered “yes”.
- Line 29 – Did the organization receive more than $25,000 in non-cash contributions?
- Line 30 – Did the organization receive contributions of art, historical treasure, or other similar assets, or qualified conservation contributions?
Overview of Schedule M
Schedule M is broken into two sections, Part I – Types of Property and Part II – Supplemental Information. Part I provides a detail lists of typical non-cash contributions and requires that the organization fill out the following information.
- Column (a) – Check the box if applicable.
- Column (b) – Enter the number of contributions for each type of property or the number of items contributed. The organization must treat use separate gift (rather than each share received) as an item for this purpose. However, organizations that received contributions in the form of books, clothes, and household goods are not required to complete this column (lines 4 and 5).
- Column (c) – Enter the contribution amount for each appropriate property type.
- Column (d) – Enter the method used to determine the amount entered in Column (c). Examples include fair market value, stock exchange, thrift store value, etc.
Part I of Schedule M
The lines on Schedule M are mostly straight forward but there are a couple of lines that may need some additional clarification.
- Line 3 – Contribution of fractional interest is an undivided portion of the donor’s entire interest in a work of art.
- Line 13 – Contribution of a qualified real property interest that is restricted for the exterior of a certified historic structure. A qualified real property interest means any of the following, (1) the entire interest of the donor (2) remainder interest or (3) a restriction, granted in perpetuity on the use of which may be made of the real property.
- Line 14 – Qualified conservation contribution is a contribution made by a qualified real property interest to a qualified organization. Qualified real property is defined above, and qualified organization means either a government unit, a publicly supported organization, or a supporting organization that is controlled by a governmental or a publicly supported charitable organization. The qualified organization must have a commitment to protect the conservation purpose and have the resources to enforce restrictions.
- Lines 25 to 28 – Reports all other non-cash contributions that do not fall into lines 1 through 24.
- Line 29 – Disclose the number of Forms 8283 (Non-Cash Charitable Contributions – contributions greater than $500) received by the organization and the organization signed Part V – Donee Acknowledgment.
- Line 30a and 30b – Report the number and arrangement of the contributions of assets that must be held for at least three years from the date of the initial contribution and is not required to be used for exempt purposes for the entire holding period. Be careful. Checking this box “yes” as it may be a red flag to the IRS since the transaction being referenced here is considered to be a tax scam.
- Line 31 – Does the organization have a gift acceptance policy that requires the review of any nonstandard contributions? The policy should address some of the following that may be applicable to the organization.
- Acceptance of unusual non-cash contributions such as crypto and NFTs, assets with debt, assets that require costs for maintenance and S corporation stock and other closely held business stock
- The process for obtaining signatures on the Form 8283
- Acknowledgements and filing of Form 8283
- Whether the entity holds non-cash items for more than 3 years
- Naming opportunities
- Form 990 reporting of anonymous gift
Part II of Schedule M – Supplementary Information
Part II is primarily used to provide additional detail about any holding period requirements for donated assets or use of third parties to solicit, process, or sell non-cash contributions. It is also used to describe whether the organization is reporting the number of contributions, the number of items contributed, or some combination of the two for each type of property from Part I.
Schedule M can be cross referenced with other parts of the Form 990. The total value reported on Schedule M should tie to Part VIII, Line 1g for total non-cash contributions received by the organization during the applicable tax year. The total amount reported as non-cash contributions on Schedule B may not tie to the total non-cash on Schedule M, as well as the totals listed on any Forms 1098-C (donation of qualified vehicle valued at $500 or more) or Forms 8282 (Donee Information Return used to report sale of certain contributed assets that are required to be held for three years of more (charitable use)).
Questions on non-cash donations specific to your not-for-profit organization? Contact your Keiter Opportunity Advisor or Email | Call: 804.747.0000. Our not-for-profit team is well versed in these and other not-for-profit accounting considerations.
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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.