Part III of Form 990 and 990-EZ requires organizations to report information regarding their program service accomplishments. The information organizations provide in this section of Form 990 helps the IRS to determine if their activities are appropriate for their exempt status. This section also gives organizations an opportunity to convey to the public what they accomplished throughout the year.
Ultimately, the information reported in this section can have a big impact on your organization, so, it is important that you are completing it properly! ExpressTaxExempt is here to help you file Form 990 and 990-EZ quickly and easily. Here’s an overview of part III of Form 990/900-EZ and how to report your organization’s program service accomplishments.
What is a Program Service?
A program service is an activity that accomplishes an organization’s ongoing objective or mission and upholds its exempt purpose. Organizations should not report a fundraising activity as a program service accomplishment unless is it substantially related to the accomplishment of the organization’s exempt purpose. Typical program service accomplishments can include:
A section 501(c)(3) organization’s charitable activities such as a hospital’s provision of charity care under its charity care policy, a college’s provision of higher education to students under a degree program, a disaster relief organization’s provision of grants or assistance to victims of a natural disaster, or a nursing home’s provision of rehabilitation service to residents.
A section 501(c)(5) labor union’s conduct of collective bargaining on behalf of its members;
A section 501(c)(6) business league’s conduct of meetings for members to discuss business issues; or
A section 501(c)(7) social club’s operation of recreational and dining facilities for its members
When describing your organization’s program service accomplishment, you should be as clear, concise as possible! If possible, you should use specific measurements, activity objectives, and statistical information in your descriptions. :
Specific Measurements: Clients served, days of care provided, number of sessions or events held, or publications issued.
Activity Objective: discuss the goals for the current time period and long-term
Statistical Information: You should provide reasonable estimates for any statistical information if exact figures aren’t readily available
How to Report on Form 990
On line 1, describe your organization’s mission. If your organization does not have a mission that has been adopted or ratified by its governing body, enter “None” in this field.
On line 2, answer “Yes” if your organization began any new significant program services prior to the end of the tax year that it didn’t describe in a prior year Form 990 or 990-EZ.
Answer “No,” if your organization has never filed a Form 990 or 990-EZ before.
For line 3, answer “Yes” if your organization made any significant changes in the way you conduct your program services or if you stopped conducting significant program services that had been conducted in a prior year.
These items should be described on Schedule O (Form 990 or 990-EZ)
On line 4, your organization will need to describe the accomplishments for each of your three largest program services. This should be measured by the three programs with the highest expenses, not including donated services or materials, equipment, or facilities. If your organization has 3 or fewer activities, you should describe each activity. Organizations can also use Schedule O, Supplemental Information, to describe additional activities that they consider to be notable.
Organizations will also be required to report the number of grants and allocations to others, the total expenses, and revenue, if any, for each program service reported.
Expenses and Grants
Section 501(c)(3) and 501 (c)(4) organizations must enter the total expenses included on Part IX, line 25, column (B), and total grants and allocations (if any) included within such total expense that was reported on Part IX, line 1-3, column (B).
For each program service listed, organizations must report any revenue obtained from the activity.
Unrelated business income
Organizations should also include unrelated business income from a business that exploits an exempt function, such as advertising in a journal.
With ExpressTaxExempt, you can accurately and securely e-file Form 990 and 990-EZ. When you e-file Form 990 or 990-EZ with ExpressTaxExempt, our application will automatically generate Schedule O based on the information you provide on your return. Our dedicated customer support team will also be there to assist you during your filing if necessary!