Topic List Topic: Ambulance Service
(February 2010) Topic: Attending Meetings
(April 2009) Topic: Blood Drives
(July 2014) Topic: Donated Equipment/Supplies — Locally & Globally
(2009) Topic: Donated Food
(2007) Topic: Donated Hospital Services — Lab, Radiology, Pharmacy
(2007; Updated November 2015) Topic: Donated Space
(2007) Topic: Electronic Health Records
(2012; Updated November 2015) Topic: Employee and Physician Time
(2007; Updated November 2015) Topic: Employee Participation in Professional Organizations
(May 2012) Topic: Foreign Poverty Tours/Medical Missions
(September 2012) Topic: Free Telemedicine Services to Community Hospitals
(January 2011) Topic: Funds and Services Donated by One Organization to Another
(2007) Topic: Funds Raised by Hospital Auxiliary Groups
(2007; Updated November 2015) Topic: Hospital Volunteers' Time
(2007) Topic: Letters Restricting Donations
(November 2015) Topic: Parking
(2011) Topic: Paying Expenses on Behalf of Individuals
(January 2011; Updated November 2015) Topic: PILOTS/SILOTS
(2007) Topic: School and Team Sports
Please Take Note: The information provided below does not constitute legal or tax advice. The material is provided for informational/educational purposes only. Please consult with counsel regarding your organization's particular circumstances.
Topic: Ambulance Service
Question: We own an ambulance service at our hospital. It was used at a USGA women's tournament for the better part of a week. They were there for emergency purposes only but did transport a few people to our local hospital. Would this qualify for a community benefit for the CBISA software? Also, our service covers local football games and local community fairs at no cost. Would these events also qualify?
Recommendation: Consider the primary purpose of providing the ambulance service: Was it to have a presence at the events for public relations reasons or to ensure that any emergencies came to your facility? If so, then it would be considered marketing and not a community benefit. If the primary purpose was to provide a service, and if you did not provide the ambulance service, the responsibility might fall to a government entity, then we recommend it be reported as community benefit. If it is reported, be sure to document why you are providing this service.
Topic: Attending Meetings
Question: Should we include the time of executive staff members attending meetings and participating in community-based initiatives?
Recommendation: If executive staff members attend meetings and participate in community-based initiatives that are related to health care and the organization's mission, then time should be counted as community benefit (community-wide obesity programs, health care access initiatives). If the meetings and initiatives deal with activities that meet the criteria for community building (addressing the root causes of health problems such as homeless coalition, literacy strategies) report as community building. If meetings and initiatives are related to community good will, staff time should not be counted as community benefit.
Topic: Blood Drives
Question: My hospital works with the Red Cross and holds quarterly blood drives at our facility. We have small direct costs in food, some staff time at registration, canteen, etc. The main thing is that most of our employees come down to give blood while on the clock. Could this be considered community benefit?
Recommendation: Yes, the hospital is contributing the value of the employees' time.
Topic: Donated Equipment/Supplies — Locally and Globally
Question: How should we report donated supplies and equipment?
Recommendation: When donating supplies/equipment, the value should be based on remaining "book value" — so if the equipment cost $1000 and depreciation has been $600, then "book value" is $400 and that amount can be written off at the time of donation. Supplies aren't depreciated, so the original cost of those supplies makes sense as the basis for the value. Count as Category E3. In-kind donations. When giving cash, count as Category E1. Cash Donations.
When donating outside of your community, you can count the value of the supplies/equipment and the cost of storage and shipping. Consider proportionality. What is the magnitude of the donation compared with what else is being done in the community? It should not constitute a large proportion of your community benefit.
Question: When we give supplies or money to another country, or a different part of this country because of poverty that exists there or because of a natural disaster such as a hurricane, can it be included as community benefit?
Recommendation: We recommend including donations to other areas of the country or other countries in response to poverty or natural disasters. We also recommend including these areas in community benefit planning documents that describe the community you serve, especially if you have an ongoing relationship with a foreign mission or area in need. However, it is important to consider proportionality. What is the magnitude of the donation compared with what else is being done in the community? It should not constitute a large proportion of your community benefit.
Topic: Donated Food
Question: Food left from the cafeteria at the end of the daily serving period is donated to the homeless shelter. The food would be thrown away, and we don't capture full value when reporting. Can we count the cost of food served at community meetings like tours, cancer support, homeless shelter board, etc.
Recommendation: We recommend that the cost of packing and transporting the left over cafeteria food (but not the cost of the food) can be counted under Category E3. In-Kind Contribution.
The cost of food provided as part of a community benefit activity should be considered an expense for that community benefit activity. Be sure that the activity meets the criteria for being a community benefit (addresses a community need and a community benefit objective). Tours are not a community benefit, and, therefore, the cost of food served in conjunction with tours should not be counted as community benefit.
Topic: Donated Hospital Services — Lab, Radiology, Pharmacy
Question: My hospital provides discounted or free lab and radiology services as well as medications to other providers in the community. Can these be counted and under which category?
Recommendation: If these services are not tied to your individual patients, count these services under Category E3. In-Kind Donations. If they are tied to your individual patients who meet the hospitals financial assistance criteria, these costs may be counted under financial assistance/charity care.
(Updated November 2015)
Topic: Donated Space
Question: Our hospital is leasing a floor on one of our wings to our system’s hospice program to start a "Hospice House" for patients who don't want to be at home during their final days. Our hospice program is part of our system's Senior and Community Service programs and their finances are controlled by Senior Services. They are separate from the hospital but yet we are all under the system's umbrella. We are leasing the space at a nominal fee since it is a service offered by our system and the fact that it meets a huge community need.
What can be reported as community benefit and how? The service is needed by the community and we will be collecting $390,000 less per year for the space than "market." Can we claim the $390,000 as community benefit?
From Keith Hearle of Verité Healthcare Consulting, LLC.
There are two options you might want to consider:
- One, you can count the donated space as an "in-kind" donation. The CHA Guide and the IRS 990 Schedule H instructions speak to counting space provided to community organizations in this way, so treating this clinical space in a similar fashion is consistent with that guidance. For this option to be credible, you probably want to be sure that the nominal payment on the space in fact is nominal (i.e., $1 per year or even zero). But you’ll want a lease agreement in place to cover liability and other important matters.
- Second, you can charge the hospice organization fair market value (FMV) for the space, but then make a community benefit cash contribution/grant to the organization that offsets the FMV amount. In other words, charge $390,000 and get paid for the space — but then separately give say $390,000 or $400,000 explicitly to help the hospice entity benefit the community. The two payments should not be exactly the same or discussed as a quid pro quo. These are two separate transactions — FMV payment for the lease, and community benefit grant. To report cash contributions like this as community benefit there are rules that must be honored (you must restrict the use of the funds to a community benefit purpose — such as charity care to be provided by the Hospice, or Medicaid services).
Also, it's important to assure that a prudent layperson would agree that supporting the hospice, in a general sense, truly is a community benefit (meets the definition of a subsidized health service, provides services to low-income people, etc.). That's important under both scenarios.
Question: We allow many outside groups to come in and use our facility for meeting space. Some of these groups, such as the Parkinson's support group, are directly related to improving health of seniors in the community. However, we do have a few groups that meet here (such as Girl Scout troops) for free but they do not relate directly to health care in the community. How do we count this? Under which category do we place these items? Can we count these costs as community benefit?
Recommendation: Donating space to health care related not-for-profit community groups can be counted as community benefit. Hosting non-health care related community groups, while not directly tied to improving health, supports the community building role of your organization and therefore should be reported as community-building.
We recommend estimating the overhead expense, staff time to set up and breakdown room, and cost of refreshments provided for the meetings. For the Parkinson's support group, the costs should be reported under Category E3. In-Kind Donation, or in the case of community building related groups, in F. Community Building. When estimating the true cost of the space, make sure to use cost (which can be derived from your organization's cost report) rather than using market rate values. For example, do not count what a local hotel might charge for a conference room, but develop an estimate of your costs.
Topic: Electronic Health Records
Question: When can the cost of electronic medical /health records be reported as community benefit?
Recommendation: We recommend that a contribution for the cost of electronic medical records be reported as community benefit when the contribution is for a Federally Qualified Health Clinic or other nonprofit network of physicians or health care organizations serving low-income and uninsured persons to help manage the care of their patients or to improve its services. It is not recommended that the costs of providing electronic medical records to physicians be reported as a community benefit as this is primarily a way to develop ties between physicians and hospitals.
(Updated November 2015)
Topic: Employee and Physician Time
Question: When and how should we count the time of our employees and physicians when they are involved in community benefit activities?
Recommendation: Employee and physician time spent on hospital community benefit activities can be quantified as a community benefit expense if the employee and/or physician:
- Have been assigned to represent the organization, not just invited or encouraged to participate
- Are participating on paid time (thus the physician presumably must be employed or under contract); and
- The time represents a true cost to the organization.
If these conditions are not met, the employee/physician's time:
- Should not be quantified as an expense for that community benefit activity
- Should be reported only in the narrative section of the organization's community benefit report
- Should be considered the personal volunteer time of the individual. These personal contributions of time, including the number of volunteer hours, can be highlighted in the narrative portion of the community benefit report to "tell the story" of how the organization's employees and physicians have contributed to the community.
Employee and/or physician time should be listed under the individual community benefit activity or under Category E3. In-kind Donations for time spent that is not captured under a specific community benefit activity.
(Updated November 2015)
Question: How do I quantify time for salaried employees?
Recommendation: If the salaried employees are participating in community benefit activities as a representative of the hospital, count all of the hours including those outside of the regular work day. However, hospitals are advised to be very conservative about how many hours outside the workday that are counted.
To quantify the employee or physician's time, we recommend that you consider these options with your finance staff:
- Use actual cost of an individual's time, based on the persons' salary, adjusted for benefits; or
- Use the average cost of the position (nurse, physician, or other category of employee) based on salaries for the position, adjusting for benefits; or
- Use an average cost for all employees, and use the same amount no matter what position or what person is carrying out the function
Question: My hospital works with the Red Cross and provides quarterly blood drives at our facility. We have small direct cost in food, some staff time at registration, canteen, etc. The main thing is that most of our employees come down to give blood while on the clock. Could this be considered community benefit?
Recommendation: We recommend reporting as community benefit because the hospital is contributing the cost of the employees' time and may need to bring in staff to back-fill the time when employees are involved in the program.
Topic: Employee Participation in Professional Organizations
Question: One of our nurse executives participates as a board member in her state professional organization that promotes excellence in nursing through professional development, networking, research and innovations for the advancement of nursing practice. Another executive serves on the board of a national organization. Can we count this time?
Recommendation: We recommend that contributions (time or money including dues) to professional organizations not specifically and directly related to community benefit not be reported as community benefit. If the organization is a charitable organization under IRS definition (meaning donations are tax-deductible) and its purpose, in full or part, meets the definition of a community benefit, we recommend counting the full or proportional expenses under Cash and In-kind Donations. It the organization's purpose meets the definition of Community-Building, for example the national organization is primarily dedicated to improving federal housing policies for low-income persons, count contribution under Community-Building.
Topic: Foreign Poverty Tours/Medical Missions
Question: We sponsor staff and executives to travel to poor counties for "poverty immersion trips" and for mission trips to deliver health care to the people. Are these activities community benefit?
Recommendation: It is not recommended to count as a community benefit the cost of sending executives on immersion trips to distant sites (e.g., part of orientation). While the trips might help executives develop a greater appreciation for the plight of the poor/vulnerable and motivate them to champion projects that help this group, there is not a direct benefit to the community. These trips could be described in the narrative portion of a community benefit report.
However, the costs incurred by the hospital of sending health care professionals on paid hospital time to deliver health care in underserved communities can be counted as a community benefit. Count the time of the professionals only if the organization is paying for them to be part of the trip. If they are volunteering their time, report only the cost to the organization, such as travel expenses.
Question: We recruit and train physicians, nurses and paramedics to participate in medical missions that provide medical and surgical care to underprivileged families in the Philippine Islands. We do not report as community benefit the time of the professionals if they are volunteering, but should we report the administrative costs? Does it matter if the staff and physicians are affiliated with the hospital?
Recommendation: We recommend reporting the administrative costs of recruiting and training professionals to serve in foreign medical missions – when the need for the medical service in that country is clearly demonstrated. It does not matter if the participating staff and physicians are affiliated with the hospital.
However, as with other donation-related activities directed outside of the community, we recommend that you consider proportionality: What is the magnitude of this contribution compared with what else is being done in the community? It should not constitute a large proportion of your community benefit.
Topic: Free Telemedicine Services to Community Hospitals
Question: Our hospital provides 24/7 telemedicine services to community hospitals, primarily in EDs, to assist with the evaluation of patients with symptoms of an acute stroke. The goal of this program is to enhance stroke care in the region through staff education, shared clinical protocols and rapid assessment of the patient by one of our neurovascular specialists with expertise not available within the community. There is no charge to the community hospitals or patients for this service. The target population is patients in community hospitals with acute stroke symptoms, regardless of their insurance coverage.
Recommendation: We recommend first carefully analyzing why this program is being provided. Was the reason for starting and continuing it to respond to an identified community health need or was the primary purpose to gain referrals or other benefit to the hospital? If the primary purpose of the program is to address an identified community health need, we recommend reporting this as an "in–kind" contribution in the category of "E. Cash and In-kind Contributions." You are providing the service to other organizations, not directly to patients, and services to other organizations should be reported in this category.
Topic: Funds and Services Donated by One Organization to Another
Question: Should all dollars contributed for community benefit activities from one organization (files own tax form under an Employer Identification Number (EIN)) to another (EIN) be reported as cash and in-kind donations or in other reporting categories? For example:
- A hospital (EIN) contributes to an unrelated community group to support medical education activities.
- A hospital (EIN) transfers money to a parent organization (with a separate EIN) to fund "community benefit operations" provided by the parent.
- A hospital (EIN) transfers funds to support charity care provided by a physician group organized as a separate nonprofit foundation (EIN)
Recommendation: In all three cases, the funds would be reported as a cash and in-kind donation on Part I, Line 7 of Schedule H., but only if the transferring organization (EIN) restricts the use of the funds by the recipient organization (EIN) to be used for a hospital community benefit purpose. We have been told by staff at the IRS that as long as the funds are restricted for use as charity care or other hospital community benefit activity, they can be counted on Part I, Line 7 of Schedule H but also should be reported only in the category of cash and in-kind donation.
Topic: Funds Raised by Hospital Auxiliary Groups
Question: Our auxiliary groups raise money for the hospital. Can we count these funds as a community benefit?
Recommendation: We recommend reporting the cost of raising the funds as a hospital community benefit, if these costs are borne by the entity that houses the hospital (EIN) and will be used to support community benefit activities. This means that the hospital and auxiliary are housed in the same entity, having a single EIN and the funds are used for activities that meet the criteria for community benefit. You can also report the cost of community benefit programs provided by the hospital with funds raised by the auxiliary.. Funds raised by the auxiliary for non community benefit programs, such as purchase of a new MRI machine, are not reportable as community benefit.
(Updated November 2015)
Topic: Hospital Volunteers' Time
Question: Can we assign a dollar value to our hospital's volunteers' time and count as community benefit?
Recommendation: The Guide recommends not putting a financial value on volunteer time. This includes board members, volunteers for the organization's general operations (such as candy stripers and gift shop volunteers), non-employee volunteers, and staff members volunteering on their own time.
The number of volunteers, the number of hours they contribute, and a description of value of the volunteer activity can and, in fact, should be included in a narrative report, supplementing the quantifiable report in order to present a full picture of the organization's community benefit.
Do not count the time spent administering the volunteer program where volunteers are supporting the organization in such activities as gift shop, visitor welcoming, and library cart.
Topic: Letters Restricting Donations
Question: If we donate two first aid kits to a boy scout troop or donated other items, would we need to provide a letter restricting the use for those the same as you would for a cash donation?
Recommendation: We recommend maintaining records of in-kind donations including the source of the requests, financial value and the community benefit purpose of the in-kind donation.
Question: If making a donation to an organization whose entire mission is health-related community benefit - like American Cancer Society, is it really necessary to have the written letter restricting donation to a community benefit?
Recommendation: The IRS Schedule H instructions require that donations be restricted in writing to one or more community benefit activities. This would include contributions to organizations with missions to provide community benefit.
Question: Providing parking validations to low-income patients is not costing the hospital anything; however, we are not receiving payment for parking when the validations are issues. Can we count the lost revenue as a cost of the validations a quantified community benefit?
Recommendation: Providing vouchers for parking represents an "opportunity cost" — revenue that you could have received — rather than an actual net cost to the hospital. Therefore, we recommend not counting free parking unless you can establish that the hospital is incurring an actual expense. If, by offering free parking to low-income patients, spaces no longer are available to patients with the ability to pay, then a case can be made to count the lost revenue as community benefit. Also, check with your finance department to see if the parking costs are imbedded in the overhead of the organization to determine whether the cost is already accounted for most patients in need (charity care and Medicaid patients).
Topic: Paying Expenses on Behalf of Individuals
Question: When my organization pays for services for an individual patient, do I count the expense under Category E. Cash and In-kind or under A3. Health Care Support Services?
Recommendation: We recommend that when payment is made to another organization on behalf of or directly to an individual patient or non patient and when the gift is restricted to community benefit purposes, this expense can be reported Category A3, Health Care Support Services. IRS Instructions direct hospitals to report as cash contributions those contributions made to "entities and community organizations that share the organization's goals and mission. " We interpret this to mean that contributions on behalf of or to individuals be reported in Category A3, Health Care Support Services.
(January 2011; Updated November 2015)
Question: We have a contract for valet parking for our emergency room. The cars are moved to our parking garage, and there is no charge for this service regardless of how many hours or days they are parked there. Can we claim the valet parking as a community benefit as it makes health care more accessible to the public?
Recommendation: We recommend not reporting valet parking as community benefit. While valet parking is a convenience, it is unlikely to address the basic problem of health care access.
Question: Should we include taxes we pay, such as PILOTS (payment in lieu of taxes) or SILOTS (services in lieu of taxes), sales tax (that nonprofits pay in some states) and unemployment taxes, as community benefit?
Recommendation: With the exception of Medicaid provider fees (sometimes referred to as taxes or assessments), taxes paid by non-profit organizations should not be accounted for as community benefit. While paying taxes relieves government burden, these payments do not explicitly help address a community health or public health need.
These payments may be counted if you can demonstrate that they are used by government for a program or service that otherwise the hospital might provide as part of its community benefit program — for example, if the organization pays the city to support or sponsor a clinic for the uninsured.
Many tax-exempt organizations agree that the dollar value of community benefits they provide should equal or exceed the value of their incremental "tax benefits," the taxes that would be paid if the organization no longer were exempt. Taxes currently paid by the organization can be factored into that analysis.
Topic: School and Team Sports
Question: We help support adult and youth sports in our community. We purchased trophies for the Governor's Council on Fitness to be awarded to businesses, schools, individuals who have made advancement in fitness or promoting fitness. Our name is on the trophies. We also purchased T-shirts, programs and banners for the holiday high school boys basketball tournament. Again, our name is on all the items. Can we report the cost of these items as a community benefit expense?
Recommendation: The task force recommends that the cost of sports items such trophies and T-shirts with the organization’s name should not be reported as community benefit because they are primarily provided for public relations/marketing reasons, not in response to community need.
In some situations, the donation of fitness equipment and sports shoes for low-income/at-risk children could be reported as community benefit if they are provided in response to a documented community need which is part of your community benefit plan. In the example of equipment, if poor physical fitness and/or obesity is an identified need in your community , and, working with community partners it was decided that purchase of equipment would be an appropriate way your organization could contribute to improved fitness, then we would recommend reporting the equipment donation as community benefit. In the case of sports shoes for low-income or at-risk children, the purchase of those items should be part of a broader plan to improve the health of this population.
Question: Would an athletic trainer provided to the school system free of charge be considered a community benefit? Would school sport physicals provided free of charge be considered a community benefit?
Recommendation: In most instances, we recommend that support for youth sports programs not be reported as community benefit because this support is usually part of marketing or creating community good will. In limited situations, such support may be reported as community benefit. We recommend reporting as community benefit youth sports programs in the following circumstances:
- When there is an identified community need, for example, without your organization's assistance, the trainer/physicals would not be available, and
- When appropriate follow-up is provided, including referrals to health care providers who are accessible and available for required care, and
- When follow up is provided for children who are low-income and/or uninsured.