Our company foundation sometimes carries out its own charitable programs. For example, last year we organized a conference on the topic of evaluating program impact for our grantees and other nonprofits in one of our communities. Where does this information get reported on our Form 990-PF?
Expenses for activities carried out directly by the foundation (other than grantmaking) will appear as operating and administrative expenses in Part I of the Form 990-PF. Expenses will be broken down based on the nature of the expense. For example, payment to speakers for the conference would typically be included in “other professional fees” on line 16(c) but expenses related to producing a publication would be reported on line 22.
Reporting direct charitable expenses as operating and administrative expenses on Part I of Form 990-PF often causes concern for private foundations because it makes it appear that significant resources are being spent on overhead and administrative expenses instead of grants. However, completing Part IX-A “Summary of Direct Charitable Activities” will help tell the story of the use of operating and administrative expenses. Part IX-A of Form 990-PF allows the foundation to list and describe its four largest direct charitable programs. Direct and indirect expenses related to such programs are also reported in this section.
Grants and expenses related to administering grant program are not included as direct charitable activities. For example, costs associated with reviewing grant proposals and site visits would not be reported in this section. However, technical assistance to grantees, such as the conference described above, would be considered a direct charitable activity because the technical assistance is beyond monitoring or advising grantees in the use of grant funds. Further examples of direct charitable activities and guidelines for reporting expenses related to such activities are included in the Form 990-PF instructions.