Annual Reporting and Public Disclosure

Q1: What annual reporting requirements apply to a foundation?

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This is part of "What Every Grantmaker Should Know & Frequently Asked Legal Questions."

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Federal Requirements: All private foundations are required to annually file federal income tax Form 990-PF, even if the organization's annual gross receipts are less than $25,000.

Public charities, including community foundations, are generally required to file IRS Form 990 if their annual gross receipts are normally more than $25,000; however, some organizations may file the simpler Form 990-EZ. For tax year 2009, public charities with gross receipts of less than $500,000 and assets of less than $1.25 million are eligible to file Form 990-EZ. For subsequent tax years, the ceilings are reduced to $200,000 and $500,000, respectively.

Forms 990-PF, 990 and 990-EZ must be filed by the 15th day of the fifth month after the end of an organization's accounting period. For example, a private foundation with an accounting period ending Dec. 31 must file its Form 990-PF by May 15 of the following year. Form 8868 may be used to request an automatic three-month extension.

Public charities with gross receipts normally $25,000 or less must file an annual report with the IRS that provides basic information about the organization, such as its name, address, web address, principal officer and evidence of its continuing eligibility for exemption from Form 990 filing requirements.

Minnesota Requirements: All Minnesota nonprofit corporations are required to file an Annual Business Renewal with the Minnesota Secretary of State by December 31 of each year. The filing is free and can be done online. Failure to file will result in dissolution of the corporation without further notice. During an organization's first year of existence, the organization itself needs to obtain the form.

Most charitable organizations that solicit contributions from the public in Minnesota are obligated to register and report annually to the Minnesota Attorney General's Office. Organizations must file a Charitable Organization Registration Statement with the appropriate attachments and $25 fee within 30 days after the organization's total contributions exceed $25,000. In each subsequent year, organizations must file a Charitable Organization Annual Report with the appropriate attachments and $25 fee by the 15th day of the seventh month following the close of its fiscal year. Certain charitable organizations are exempt from the registration and reporting requirements. For example, organizations are exempt if they a) do not receive, and do not expect to receive, more than $25,000 in contributions in any year, and b) do not have paid staff members or employ a professional fundraiser.

Charitable organizations that do not solicit contributions from the public (if they have gross assets of $25,000 or more at any time during the year) are obligated to file a Charitable Trust Registration Statement, including the appropriate attachments and a $25 fee, with the Minnesota Attorney General's Office within three months after the organization receives assets. Such organizations are not required to subsequently submit an annual form and fee; however, such organizations are required to annually submit copies of their Forms 990, 990-EZ or 990-PF. The reports must be filed by the 15th day of the fifth month following the close of the organization's fiscal year.

Q2: What information is a foundation required to share with the general public?

Upon request, a public charity or private foundation must make available for public inspection, without charge, a copy of its annual returns (Forms 990, 990-EZ or 990-PF and 990-T, if any) for three years after filing. Public charities are not required to publicly disclose the portions of the annual returns that include the names and addresses of contributors to the organization (whereas private foundations are required to publicly disclose such information).

A foundation also must make available for public inspection, without charge, a copy of its exemption application, along with the accompanying attachments and amendments, and any documents issued by the Internal Revenue Service concerning the application. However, the foundation may request that certain information be withheld from public inspection on the grounds that it constitutes a trade secret or some other form of intellectual property.

Q3: What satisfies a foundation's public information requirements?

Foundations and public charities must make their annual returns and exemption application materials available for inspection, without charge, at their principal, regional and district offices during regular business hours. If the organization does not maintain a permanent office, it must make the information available for inspection at a reasonable location of its choice; it may also mail the information.

Organizations must provide copies of their annual returns and exemption applications to anyone who requests a copy either in person or in writing. The organization may charge a reasonable amount for copying these materials, including staff time and actual costs. As an alternative to providing copies, an organization can make its information widely available by posting the information on a web page and directing requestors to such page.

Q4: What information must a foundation retain regarding its grants?

Private foundations that make grants to an individual for travel, study or similar purposes are required to retain the following information regarding the grant: (a) all information the foundation secures to evaluate the qualification of potential grantees, (b) identification of grantees (including information regarding whether grantee is a disqualified person), (c) specification of the amount and purpose of each grant, and (d) the follow-up information that the foundation obtains in complying with these record retention requirements. Internal Revenue Service regulations broadly require that organizations retain records "so long as the contents thereof may become material in the administration of any internal revenue law." However, the Treasury regulations do address the issue of how long a grant recipient must keep records: four years after completion of the use of grant funds.

Q5: How long must a foundation retain its records?

An annual return is required to be available until three years have passed from the date the return was required to be filed (including any extensions) or was filed, whichever is later.

Exemption applications (and related documents) are required to be available indefinitely. However, applications are not required to be available if they were filed before July 15, 1987, and if the organization did not have a copy of the application on July 15, 1987.

The Internal Revenue Service does not specify exact time periods for which exempt organizations shall maintain general records. Rather, the Treasury Regulations broadly require that organizations retain records "so long as the contents thereof may become material in the administration of any internal revenue law." Therefore, organizations should take a best-practices approach regarding records retention and should retain as much information as is reasonable for a reasonable period of time. Organizations should consult with their attorneys regarding this issue, but it is commonly recommended that organizations retain information for a period of seven years.