Form 990-EZ Tutorial #8: Part III, Program Service Accomplishments
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Part III on page 2 is required to be completed by all 501c3 and all 501c4 organizations. It is optional for other types of organizations (like a 501c social club or 501c6 business league, etc).
Part III on Page 2 is where the organization shows how much of its money was spent on its mission. Most organizations do not put enough effort into this part of the form, when in fact it might just be the most important part of the Form 990-EZ.
Only money spent in the direct conduct of the organization's mission is shown in Part III, lines 28 through 32.
Management and general expenses and fundraising expenses are not shown here at all. So, unless you did not have any management and general or fundraising expenses, Line 32 will NOT be equal to line 17 (total expenses) on page 1 of the 990-EZ.
There is not much room provided in this section to accommodate detailed descriptions of your programs. In most cases it is desirable to simply enter "See Schedule O" and enter the descriptions on Schedule O. If Schedule O is used, put a mark in the box provided at the beginning of Part III to indicate that the organization has used Schedule O to provide answers to this part.
The first question in Part III asks "What is the organization's primary exempt purpose?" Not much space is given for an answer, so you will almost certainly need to enter "See Schedule O" and provide an answer there. You may be able to fit the answer on the line provided if you have a very simple organization, but even then it is not recommended to . For instance: "To help homeless persons" might be acceptable, but "To provide hot meals, medical and dental care, and addition treatment and counseling to homeless persons in the downtown St. Louis, Missouri area" would be a much more useful description to someone who might be considering making a donation to your organization.
Line 28, 29, and 30 provide space to list and describe your three largest program service activities. Most small organizations will lump all of their activities together on line 28, since they are usually fairly tightly focused on one main activity. But if your organization has several different activities and you track income and expenses separately for each activity, then you should use a separate line for each program. For instance, if you are a local wildlife conservation organization and you provide education to schools and other groups, and you also have several small events each year to increase awareness of your organization and to distribute educational materials, then you could easily group all the activities together under one description on line 28.
If, however, your organization helps homeless people by (1) providing hot meals (2) providing free minor medical and dental care, and (3) providing addiction treatment and counseling, each one of those activities would be a good candidate to appear on a separate line as a separate program. Of course, to accomplish that, your accounting transactions will have to be properly categorized to allow the expenses to be separated.
Let's have a look at what a typical program service description might look like as presented on Schedule O for homeless services organization:
As you can see, each program activity and its expenses is presented separately on Schedule O.
Best to include the following information:
1. What is the activity.
2. Who and how many were served.
3. Number of volunteers involved and how much time they donated.
4. The value of any donated materials, time or services received that were used in that program.
On line 28a, the total amount spent conducting the program services during the year is entered. If the organization awarded grants as part of the program, enter the amount of the grants awarded between the parenthesis provided. The grants amount is included in the total on line 28a. Mark the box if any grants were awarded to a person or organization in a foreign country. The total of all the grants listed in Part III should agree to the grants amount that is shown on page 1, line 10.
If there were more than three programs, the largest (by dollar amount of expenses) are presented on lines 28, 29, and 30. All the others are listed and described in Schedule O and totaled on line 31.
All of the expenses listed on lines 28a through 31a are added together and the total appears on line 32. This total does not have to agree to any other line item on the return.
Be sure to put some care and effort into making this portion of the return useful to anyone trying to find out more information about exactly what your organization does and what activities it spends its money on. Prospective donors as well as members of the media may be looking very closely at this part of the return. Use it to your advantage.