Tax Brief: Form 990 – Breaking Down the Statement of Revenue

Form 990, Part VIII, Statement of Revenue reports revenue by type and classification of revenue and is one of the most important parts of the Form 990.

Breakdown of Types of Revenue

Types of revenue include Contributions, Gifts, Grants, and Other Similar Amounts; Program Service Revenue; Other Revenue; and Miscellaneous Revenue, which are detailed by line below.

Contributions, Gifts, Grants, and Other Similar Amounts (Lines 1a–Line 1h)

Contributions are broken out by source/donor type (federated campaigns, membership dues, fundraising events, related organization, government grants, and all other contributions). Noncash donations are included in the amounts reporting by source/donor type on Lines 1a through 1f, but are also disclosed in total on Line 1g. Contributions from fundraising events are reported here, but other gross receipts and expenses are reported on line 8.

Program Service Revenue (Lines 2a–2g)

Non-profit organizations report the five largest sources of program service revenue on Lines 2a – 2e and all other program service revenue on Line 2f. Program service revenue includes receipts for activities that further the non-profit organization’s exempt purposes. For each amount reported on Lines 2a–2f, the non-profit organization must also enter the business activity code that most closely describes the revenue.

Other Revenue (Lines 3–10)

Line 3 reports investment income (including dividends, interest, and other similar amounts). Amounts are entered at the gross amount received, and investment management fees are reported in Part IX, Statement of Functional Expenses. This is different from GAAP reporting, which requires non-profit organizations to report investment income net of investment management fees.

Line 4 reports income from investment of tax-exempt bond proceeds for bond issues that are controlled by the non-profit organization, not the governmental issuer.

Line 5 reports royalties from a non-profit organization licensing use of its property.

Line 6 reports net rental income or (loss) from real property. However, if the rental activity is part of the non-profit organization’s exempt purpose (its programs), the revenue should be reported on Line 2 (Program Service Revenue), and the related expenses should be reported in Part IX, Statement of Functional Expenses. Other rental activity can be related or unrelated to a non-profit organization’s exempt purpose, and non-profit organizations should report the revenue according to the specific IRS rules.

Line 7 reports net gain or (loss) on securities or other assets. Most non-profit organizations only report sales of securities or fixed assets on this line. Unrealized gains and (losses) are not reported on the Form 990, Part VIII Statement of Revenue and are instead a reconciling item reported on Part XI.

Line 8 reports net income or (loss) from fundraising events. If gross proceeds from fundraising events exceeds $15,000, then non-profit organizations are required to complete Part II of Schedule G, Supplemental Information Regarding Fundraising or Gaming Activities.

Line 9 reports net income or (loss) from gaming activities. If gross proceeds from gaming activities exceeds $15,000, then non-profit organizations are required to complete Part III of Schedule G, Supplemental Information Regarding Fundraising or Gaming Activities.

Line 10 reports net income or (loss) from sales of inventory. Sale of goods related to a fundraising event are separately reported on Line 8.

Miscellaneous Revenue (Lines 11a-11e)

All other types of revenue not reportable in the other lines of the Statement of Revenue are reported under Miscellaneous Revenue. Similar to Program Service Revenue, the non-profit organization must also enter the business activity code that most closely describes the revenue.

Classifications of Revenue

Classifications of revenue are broken out in the columns as follows:

• Column (A) reports total revenue, including revenue that is reported in the other columns.
• Column (B) reports revenue that is related to the non-profit organizations exempt purpose. Generally, program service revenue, and if applicable, miscellaneous revenue is reported in this column.
• Column (C) reports unrelated business revenue that is subject to unrelated business income tax.
• Column (D) reports revenue excluded from tax under IRC Sections 512–514. This generally includes exempt interest, rent, and gain or (loss) on sale of securities or fixed assets.

As you can see, Part VIII, Statement of Revenue of the Form 990 has several complex elements. It is imperative that amounts are reported accurately. Jones & Roth has a team of Form 990 specialists than can ensure your non-profit organization complies with the IRS reporting requirements. Don’t hesitate to reach out to your Jones & Roth Nonprofit Team member for additional guidance.