Are Foundation and School Related Organizations for Form 990 Reporting? Board Member Compensation Question

So just to clarify - if someone is on the foundation board but only gets paid by the school, both 990s would need to show the same compensation amount? Our 990 preparer told us we only needed to report what each entity paid directly. That sounds wrong based on what you're saying.

The preparer is incorrect. When organizations are related, you must report the person's total compensation from all related organizations, not just what each entity paid directly. Part VII of Form 990 specifically requires reporting compensation from both the filing organization AND related organizations. There's even a separate column for "Reportable compensation from related organizations." This is precisely to prevent hiding compensation by spreading it across multiple related entities.

Does it actually review your specific forms? Our accountant charges us like $500 extra every time we ask questions about our 990 prep work. Would love something that could give us straight answers without the hourly billing.

I'm a bit skeptical - there are so many nuances to nonprofit accounting. Can an AI tool really understand the complex relationships between supporting organizations and their beneficiaries? Our foundation-school structure has some unusual aspects.

It does review your specific forms! You upload your previous 990s or draft returns, and it analyzes them for inconsistencies or reporting errors. It's especially good at finding mismatches between related organizations like yours. The tool is designed specifically for tax documents, so it understands the nonprofit reporting requirements really well. It can identify when Schedule R information doesn't match across related entities or when compensation reporting is incomplete. It's like having a nonprofit tax specialist check your work before you submit.

Wait, how does this actually work? The IRS phone system is notoriously impossible - I've literally spent hours trying to get through for our church's questions.

No way this works. I've tried everything to get through to the IRS about our nonprofit status. Even our paid CPA firm can't get timely responses. Sounds too good to be true that some service could magically bypass the IRS phone system.

It really does work! They use a system that continuously redials the IRS using optimal timing algorithms until they get through, then immediately connect you when an agent answers. It's completely legitimate - you're talking to the actual IRS, not intermediaries. The service just handles the frustrating part of getting through the overwhelmed phone system. For nonprofits, it's especially valuable because the Tax Exempt Organizations division is even harder to reach than regular IRS lines. I was connected in about 25 minutes instead of the hours I spent trying on my own.

Thanks for mentioning the supporting organization aspect. I'm now wondering if we should be classified as a Type I, II, or III supporting organization. Does that classification affect how we report board member compensation? Also, we haven't had the lease arrangement appraised recently - is that something we should prioritize?

The supporting organization type (I, II, or III) doesn't change the compensation reporting requirements - you still need to report all compensation across related entities regardless of type. However, the type does affect other compliance requirements and restrictions, so it's important to get that right on Schedule A. Yes, you should absolutely prioritize getting an independent appraisal of the lease arrangement. This is a high-risk area for nonprofits with related entities. The IRS specifically looks for below-market or above-market leases between related organizations as potential excess benefit transactions. An updated appraisal provides documentation that the arrangement is reasonable and comparable to what would be negotiated with an unrelated party.

You should list her on both 990s, but with important distinctions. On the school's 990, you'll report her total hours (both employee and board hours combined) and her full W-2 compensation. On the foundation's 990, you'll list her board hours for the foundation, but you'll also report her school compensation in the "compensation from related organizations" column. Both forms should show her total compensation, just allocated to the appropriate columns to show which entity actually paid it. This ensures full transparency while clarifying which organization is providing the compensation.

That makes perfect sense, thank you! We've been doing it wrong for years then - we only reported her compensation on the school's form and left it blank on the foundation's. Sounds like we need to amend our foundation's 990 to properly disclose her school compensation in the related organization column.

There's no specific threshold for board overlap that automatically creates a related organization status. The determination is based on several factors, including common control, supporting organization status, and economic relationship. However, with your foundation existing explicitly to support the nonprofit, you're almost certainly related organizations regardless of board overlap. The control test is just one of several ways organizations can be related. The supporting-supported relationship is a clear indicator of related status under 990 rules, even with minimal board overlap.