There are 16 possible supplementary schedules that not-for-profit (NFP) and tax-exempt organizations can file. Schedule O is the only supplementary schedule that MUST be filed each year. (In fact, it’s required for all companies.) Should an NFP submit its Form 990 without Schedule O, then it may receive an incomplete return notice from the IRS.
Schedule O looks quite different than other schedules. It’s almost like a blank slate. Think of it like the stories told by Paul Harvey in his old, long-running radio show, “The Rest of the Story.” In each narration, he told a true story, sometimes one very familiar, and included details often unknown by the general public. His version offered the listener a new understanding or fresh perspective.
Schedule O does that for your NFP. Form 990 requires the basic information, and then Schedule O fills in “the rest of the story.”
What is Required on Schedule O?
Schedule O has the official IRS title, “Supplemental Information to Form 990 or 990-EZ”. The title assures NFPs that additional information is required to supplement the Form 990.
There are many areas of Form 990 where using Schedule O is recommended. In fact, the instructions that accompany Schedule O list the portions where a “Yes” or “No” answer may require further explanation on the schedule.
However, there are two lines in Form 990 where Schedule O is required (not a suggestion but a necessity). To start, Part VI, Line 11b addresses the process used by the organization to review Form 990 for filing. NFPs are required to explain that process on Schedule O. Also a necessity, Part VI, Line 19 asks if and how the organization made available to the public its governing documents, conflict of interest policy and financial statements during the tax year. Further explanation must be made on Schedule O.
Remember, Schedule O allows you to tell the rest of the story about your organization. It’s used by the public to determine the financial health and due diligence of a NFP. While many portions of Schedule O are optional, they may play an essential role in gaining large donations and sponsorships.
What Should NOT Be Included in Schedule O?
It may be tempting, though, to think that ALL supplemental explanations and narratives should go on Schedule O, but that is not true. Other schedules (e.g., Schedules A, B, C, etc.) have specific purposes, and they should be used accordingly. Also, NFPs should NOT include social security numbers since Schedule O is available for public inspection. Additionally, it should not be used to provide reasons for why the NFP’s return is late.
Assistance with Schedule O for Your NFP
Our firm specializes in the many unique facets of nonprofit accounting, and we would love to help your NFP! Whether your organization needs help with understanding what should or shouldn’t go on Schedule O or simply how to electronically file this schedule along with your Form 990, we are here to help!