IRS Form 990 or 990-EZ (Schedule G)

IRS Form 990 or 990-EZ (Schedule G) – In the world of tax-exempt organizations, accurate reporting is essential for maintaining compliance and transparency. IRS Schedule G, officially known as Supplemental Information Regarding Fundraising or Gaming Activities, plays a crucial role in detailing how nonprofits handle fundraising campaigns, special events, and gaming operations. This schedule is attached to Form 990 or Form 990-EZ and helps the IRS monitor revenue from these activities while ensuring organizations adhere to tax laws. Whether you’re a nonprofit leader, accountant, or board member, understanding Schedule G can prevent costly errors and audits.

For the most up-to-date form, download the PDF directly from the IRS: https://www.irs.gov/pub/irs-pdf/f990sg.pdf. This article breaks down the purpose, filing requirements, and step-by-step instructions for completing Schedule G, based on the latest IRS guidelines revised in December 2024 for tax year 2024 and beyond.

What Is IRS Schedule G and Why Does It Matter for Nonprofits?

Schedule G (Form 990 or 990-EZ) is a supplemental schedule that provides detailed information on professional fundraising services, fundraising events, and gaming activities conducted by tax-exempt organizations. It’s designed to promote transparency, allowing the IRS, donors, and the public to see how funds are raised and spent. For nonprofits, proper completion of this schedule is vital because it ties into broader Form 990 reporting, which discloses financial health and operations.

Key reasons why Schedule G matters:

  • Transparency in Fundraising: It reveals how much is spent on professional fundraisers and whether they have control over contributions.
  • Event and Gaming Oversight: Nonprofits must report gross receipts from events like galas or raffles, separating contributions from other income.
  • Compliance Check: Filing inaccuracies can lead to penalties, loss of tax-exempt status, or IRS scrutiny.
  • Public Access: Form 990, including schedules, is publicly available, influencing donor trust.

The form was updated to a continuous-use format in December 2024, meaning it applies to tax year 2024 and future years until superseded. This change simplifies updates for ongoing use without annual revisions.

Who Must File Schedule G (Form 990 or 990-EZ)?

Not every nonprofit needs to file Schedule G—it’s triggered by specific thresholds and responses on the main form. Here’s a quick overview:

  • Form 990 Filers: Must attach Schedule G if they answer “Yes” to Part IV, lines 17 (professional fundraising), 18 (fundraising events), or 19 (gaming).
  • Form 990-EZ Filers: Required if gross income from gaming exceeds $15,000 on Part I, line 6a, or if fundraising event income and contributions exceed $15,000 on lines 1 and 6b.
  • Thresholds by Part:
    • Part I: More than $15,000 in professional fundraising expenses (Form 990 only; 990-EZ exempt).
    • Part II: Fundraising event gross income and contributions exceed $15,000.
    • Part III: Gross gaming income exceeds $15,000.

Even voluntary filers must complete all applicable parts. If your organization doesn’t meet these criteria, you can skip Schedule G. Always consult the IRS instructions for your specific situation.

Breaking Down the Parts of Schedule G: Step-by-Step Instructions

Schedule G is divided into three main parts, plus a supplemental section (Part IV) for explanations. Below, we explain each section with key definitions and filing tips.

Part I: Fundraising Activities

This section focuses on professional fundraising services—hired experts who solicit donations for a fee.

  • Line 1: Check boxes for methods used, such as mail, email, phone, or in-person solicitations.
  • Line 2a: Indicate if you had agreements with professional fundraisers (excluding employees or officers).
  • Line 2b: List up to 10 highest-paid fundraisers (paid $5,000+), including their activities, custody of funds, gross receipts, fees, and net amounts.
  • Line 3: List states where your organization is registered or licensed to solicit contributions.

Tips: Define “professional fundraising” broadly—it includes consulting on strategies like direct mail. Report gross fees, even if bundled with expenses like printing. Use Part IV for detailed explanations if needed.

Part II: Fundraising Events

Report details on events like galas, auctions, or walks where gross receipts exceed $5,000. List the two largest events separately and aggregate others.

  • Revenue Section:
    • Line 1: Total gross receipts (before deductions).
    • Line 2: Contributions (gifts above fair market value).
    • Line 3: Gross income (Line 1 minus Line 2).
  • Direct Expenses Section (Lines 4-9): Include cash/non-cash prizes, rent, food, entertainment, and other costs. Sum on Line 10.
  • Line 11: Net income (Line 3 minus Line 10; show negatives in parentheses).

Tips: Events are for fundraising, not regular program activities. Track contributions separately for donor acknowledgments (e.g., the deductible portion of a gala ticket). Exclude gaming revenue here—report it in Part III.

Part III: Gaming

This covers activities like bingo, pull tabs, or raffles treated as single events.

  • Revenue: Line 1 – Gross revenue (receipts minus contributions).
  • Direct Expenses (Lines 2-5): Prizes, rent, and other costs. Line 6 – Volunteer percentage if applicable.
  • Line 8: Net gaming income (must match Form 990, Part VIII).
  • Additional Questions (Lines 9-17): State licenses, nonmember participation, facility usage, managers, third-party operators, and mandatory distributions.

Tips: Treat all bingo as one event. List states where gaming occurs and explain any license issues in Part IV. Retain itemized expense records.

Part IV: Supplemental Information

Use this for narratives on custody of funds, expense distinctions, or state-specific details. Reference the exact line you’re explaining.

Common Mistakes and Compliance Tips for Nonprofits

Avoid these pitfalls when preparing Schedule G:

  • Underreporting Expenses: Always include direct costs like prizes or catering—don’t net them against revenue early.
  • Misclassifying Events: Gaming goes in Part III, not II. Fundraising events must involve donor participation.
  • State Registration Oversights: List all relevant states accurately to avoid compliance issues.
  • Recordkeeping: Maintain detailed logs of receipts, contributions, and expenses throughout the year.

For best practices, consult IRS resources or a tax professional. Nonprofits should also review related schedules like Schedule B for contributions.

Conclusion: Stay Compliant with IRS Schedule G

Mastering IRS Schedule G ensures your nonprofit reports fundraising and gaming activities transparently and accurately, supporting your mission while avoiding IRS red flags. With the 2024 revisions emphasizing continuous use, now is the time to update your processes. Download the form PDF and instructions from IRS.gov, and consider professional help for complex filings. Remember, this guide is for informational purposes—always refer to official IRS documents for your specific needs.