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.
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 should be reported only in the category of cash and in-kind donation, not in other reporting categories.