While many nonprofit organizations are familiar with the 501c3 application, few are aware that the application itself is not all that needs to be filled out. There are multiple components of the form, including schedules that come after the initial questions about the organization. These schedules are required if the organization intends to apply correctly, especially if they meet the requirements of the schedule itself. The complete list of the 501c3 schedules is as follows:
• Schedule A: Churches
• Schedule B: Schools, Colleges, and Universities
• Schedule C: Hospitals and Medical Research Organizations
• Schedule D: Section 509a3 Supporting Organizations
• Schedule E: Organizations Not Filing Form 1023 Within 27 Months of Formation
• Schedule F: Homes for the Elderly or Handicapped and Low-Income Housing
• Schedule G: Successors to other Organizations
• Schedule H: Organizations Providing Scholarships, Fellowships, Educational Loans, or Other Educational Grants to Individuals and Private Foundations Requesting Advance Approval of Individual Grant Procedures
As you can see, there are a variety of different schedules. They are easy to discern by simply reading their headings, but it can sometimes require a closer to look to see if your organization should truly fill out a schedule in addition to the 501c3 application. To determine this, let us target the most commonly utilized schedules and expand on their requirements and which organizations should fill them out.
Schedule A: Churches
In spite of their religious properties, ministries are not required to fill out Schedule A. Unlike churches, ministries are typically separate entities that operate differently and do not necessaryfollow the same routine or worship service as a church. Therefore, only full-fledged churches are required to fill out Schedule A in addition to their 501c3 application. The IRS classifies a churchas a religious organization that holds the following characteristics:
• A distinct legal existence.
• A recognized creed and form of worship.
• A definite and distinct ecclesiastical government.
• A formal code of doctrine and discipline.
• A distinct religious history.
• A membership not associated with any other church or denomination.
• Ordained ministers ministering to the congregation.
• Ordained ministers selected after completing prescribed courses of study.
• A literature of its own.
• Established places of worship.
• Regular congregations.
• Regular religious services.
• Sunday schools for the religious instruction of the young.
• Schools for the preparation of ministers.
Should your nonprofit church check all of these boxes, then you must fill out Schedule A of the 501c3 application. The actual schedule itself asks questions pertaining to the listed characteristics, as well as different questions, such as how many members the church has, if the church hosts baptisms and weddings, and a description of the worship services.
Schedule B: Schools, Colleges, and Universities
Schedule B looks at education institutions, such as primary schools, secondary schools, preparatory schools, high schools, colleges and universities. This would not, however, include after school programs, daycares or home schools. To qualify as a school, the IRS requires that it be an institution that:
• Has a regularly scheduled curriculum.
• Has a regular faculty of qualified teachers.
• Has a regularly enrolled student body.
• Has a place where educational activities are regularly carried on.
Basically, the schedule requires that the school explain its structure and operations in detail. The 501c3 application does not provide such specific questions that match up with a school, or any other of the schedules, which is why a nonprofit is able to provide further information through a schedule.
Schedule C: Hospitals and Medical Research Organizations
Schedule C can be a little tricky if you have not done it before. This schedule does not include ‘hospitals’ that are group homes for children or the elderly, or institutions whose primary purpose is to train disabled individuals in pursuing careers. What it does look for are already existing hospitals and medical facilities, as well as medical research organizations that operate in conjunction with a hospital. Basically, if the hospital is providing medical care and treatment of any physical or mental condition, it will need to fill out Schedule C.
This would also include organizations such as a rehabilitation institutions, outpatient clinics, community clinics and drug treatment centers. As far as medical research goes, Schedule C must be filled out by medical research organizations that are actively conducting research.
Schedule E: Organizations Not Filing Form 1023 Within 27 Months of Formation
It is common of nonprofit organizations to submit their 501c3 application shortly after incorporating. Sometimes this is put off due to different reasons, be it a change in board members, financial difficulties, or unforeseen circumstances. However, if it has been more than 27 months since the organization incorporated, they will need to fill out Schedule E. If the organization meets the exceptions for late filing, then your 501c3 approval will be effective from the date of incorporation. If the organization does not meet the exceptions, then it will be effective from the date of the filed 501c3 application.
Some examples of organizations that typically meet the exceptions are Churches or other religious institutions, public charities with annual gross receipts that are $5,000 or less, and public charities that are filing 90 days from the end of the tax year in which their gross receipts were more than $5,000.
Schedule F: Homes for the Elderly or Handicapped and Low-Income Housing
Organizations that provide homes for the elderly or handicapped must select this schedule if they meet the particular needs of the elderly and handicapped in question. This includes needs such as physical, recreational, health care and transportation. Basically, they must be equipped to provide anything that an elderly person or handicapped individual might require to live and function comfortably.
These organizations must have homes that are within the financial boundaries of the elderly and handicapped. They must also have distinct and established policies to maintain their tenants as residents, even if the tenants eventually are unable to pay the monthly expenses. Regarding low-income housing, the organization must provide affordable housing for individuals in the community it is servicing.
Schedule H: Organizations Providing Scholarships, Fellowships, Educational Loans, or Other Educational Grants to Individuals and Private Foundations Requesting Advance Approval of Individual Grant Procedures
Last but not least, we arrive at a schedule that is intended for organizations that provide funds to individuals, as well as private foundations who are seeking approval of grant procedures. There are necessary characteristics that the IRS requires for organizations providing scholarships and other funds. If an organization selects an individual to award funds to, it must be done:
• In a non-discriminatory fashion in terms of racial preference.
• Based on need and/or merit.
• To a charitable class in terms of being available to an open-ended group, rather than to pre-selected individuals.
Likewise, the individual must use the funds for educational purposes and educational purposes alone. These purposes include tuition, books, supplies and other course-related materials. They do not include room and board, travel expenses, research and materials that are not required for courses.
Other schedules exist, as you can see from the initial list of schedules that was provided, but the schedules that were explained are among the most common used by nonprofit organizations seeking 501c3 approval. If you wish to know more about the other schedules, or are just applying for 501c3 approval in general, please contact CharityNet USA to speak to our nonprofit specialists at 407-857-9002. It is our pleasure to help you and your nonprofit succeed.