-8- General Instructions for Form 990 and Form 990-EZ

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2 b. Within the low-cost article limitation. contributions made by a taxpayer to a donee determined by reference to the fair market Examples. organization during a tax year equals $25 or value of similar or comparable goods or more. services. Goods or services may be similar or 1. E offers a basic membership benefits Contemporaneous. A written package for $75. The package gives members acknowledgment is contemporaneous if the unique qualities of the goods or services that the right to buy tickets in advance, free parking, donor obtains it on or before the earlier of: are being valued. and a gift shop discount of 1%. E s $15 The date the donor files the original return Goods or services. Goods or services preferred membership benefits package also for the tax year in which the contribution was mean: includes a $2 poster. Both the basic and made; or Cash, preferred membership packages are for a The due date (including extensions) for filing Property, 12-month period and include about 5 the donor s original return for that year. Services, productions. E offers F, a patron of the arts, the Benefits, and preferred membership benefits in return for a Substantiation of payroll contributions. Privileges. payment of $15 or more. F accepts the An organization may substantiate a payroll preferred membership benefits package for contribution by: In consideration for. A donee $3. E s written acknowledgment satisfies the A pay stub, Form W-2, or other document organization provides goods or services in substantiation requirement if it describes the showing a contribution to a donee organization; consideration for a taxpayer s payment if, at poster, gives a good faith estimate of its fair and the time the taxpayer makes the payment to market value ($2), and disregards the A pledge card or other document from the the donee organization, the taxpayer receives, remaining membership benefits. donee organization stating that organization or expects to receive, goods or services in 2. If F received only the basic membership provides no goods or services for any payroll exchange for that payment. package for its $3 payment, E s contributions. Goods or services a donee organization acknowledgment need state only that no goods The amount withheld from each payment of provides in consideration for a payment by a or services were provided. wages to a taxpayer is treated as a separate taxpayer include goods or services provided in 3. G Theater Group performs four plays. contribution. a year other than the year in which the donor Each play is performed twice. Nonmembers Substantiation of payments to a college makes the payment to the donee organization. can purchase a ticket for $15. For a $6 or university for the right to purchase membership fee, however, members are Intangible religious benefits. Intangible tickets to athletic events. The right to offered free admission to any of the religious benefits must be provided by purchase tickets for an athletic event is valued performances. H makes a payment of $35 organizations organized exclusively for at 2% of the payment. and accepts this membership benefit. Because religious purposes. of the limited number of performances, the Example. When a taxpayer pays $312.5 membership privilege cannot be exercised for the right to purchase tickets for an athletic Examples include: frequently. Therefore, G s acknowledgment event, the right is valued at $62.5. The Admission to a religious ceremony, and must describe the free admission benefit and remaining $25 is a charitable contribution that De minimis tangible benefits, such as wine, estimate its value in good faith. the taxpayer must substantiate. provided in connection with a religious Substantiation of matched payments. If ceremony. Certain goods or services provided to a taxpayer s payment to a donee organization Distributing organization as donee. An donor s employees or partners. Certain is matched by another payor, and the taxpayer organization described in section 17(c), or an goods or services provided to employees or receives goods or services in consideration for organization described as a Principal partners of donors may be disregarded for its payment and some or all of the matching Combined Fund Organization for purposes of substantiation and disclosure purposes. payment, those goods or services will be the Combined Federal Campaign, that receives Describe such goods or services. A good faith treated as provided in consideration for the a payment made as a contribution is treated as estimate is not needed. taxpayer s payment and not in consideration a donee organization even if the organization Example. Museum J offers a basic for the matching payment. distributes the amount received to one or more membership benefits package for $4. It Disclosure statement. An organization organizations described in section 17(c). includes free admission and a 1% gift shop must provide a written disclosure statement to Penalties. A charity that knowingly discount. Corporation K makes a $5, donors who make a payment, described as a provides a false substantiation payment to J and in return, J offers K s quid pro quo contribution, in excess of $75 acknowledgment to a donor may be subject to employees free admission, a tee shirt with J s (section 6115). This requirement is separate the penalties under section 671 for aiding and logo that costs J $4.5, and a 25% gift shop from the written substantiation abetting an understatement of tax liability. discount. Because the free admission is acknowledgment a donor needs for offered in both benefit packages and the value deductibility purposes. While, in certain Charities that fail to provide the required of the tee shirts is insubstantial, K s written circumstances, an organization may be able to disclosure statement for a quid pro quo acknowledgment need not value the free meet both requirements with the same written contribution of more than $75 will incur a admission benefit or the tee shirts. However, document, an organization must be careful to penalty of $1 per contribution, not to exceed because the 25% gift shop discount to K s satisfy the section 6115 written disclosure $5, per fundraising event or mailing. The employees differs from the 1% discount statement requirement in a timely manner charity may avoid the penalty if it can show that offered in the basic membership benefits because of the penalties involved. the failure was due to reasonable cause package, K s written acknowledgment must (section 6714). describe the 25% discount, but need not Quid pro quo contribution. A quid pro estimate its value. quo contribution is a payment that is given both as a contribution and as a payment for Definitions. M. Public Inspection of goods or services provided by the donee Substantiation. It is the responsibility of organization. Returns, etc. the donor: Example. A donor gives a charity $1 in To value a donation, and Through the IRS consideration for a concert ticket valued at $4 To obtain an organization s written Use Form 456-A to request: (a quid pro quo contribution). In this example, acknowledgment substantiating the donation. $6 would be deductible. Because the donor s A copy of an exempt or political There is no prescribed format for the payment exceeds $75, the organization must organization s return, report, notice, or organization s written acknowledgment of a furnish a disclosure statement even though the exemption application; donation. Letters, postcards, or taxpayer s deductible amount does not exceed An inspection of a return, report, notice, or computer-generated forms may be acceptable. $75. Separate payments of $75 or less made exemption application at an IRS office. The acknowledgment must, however, provide at different times of the year for separate The IRS can provide copies of exempt sufficient information to substantiate the fundraising events will not be aggregated for organization returns on a compact disk amount of the deductible contribution. purposes of the $75 threshold. (CD-ROM). Requesters can order the complete The organization may either provide: Good faith estimate. An organization set (all Forms 99 and 99-EZ or all Forms Separate statements for each contribution of may use any reasonable method in making a 99-PF filed for a year) or a partial set by state $25 or more, or good faith estimate of the value of goods or or by month. For more information on the cost Furnish periodic statements substantiating services provided by an organization in and how to order CD-ROMs, call the TEGE contributions of $25 or more. consideration for a taxpayer s payment to that Customer Account Services toll-free number comparable even though they do not have the Separate contributions of less than $25 organization. A good faith estimate of the value ( ) or write to the IRS in are not subject to the requirements of section of goods or services that are not generally Cincinnati, OH at the address in General 17(f)(8), regardless of whether the sum of the available in a commercial transaction may be Instruction A. -8- General Instructions for Form 99 and Form 99-EZ

3 The IRS may not disclose portions of an Any letter or other document issued by the request for inspection (normally not more than exemption application relating to any trade IRS concerning the application. 2 weeks) and at a reasonable time of day. secrets, etc. See the instructions for Schedule Application for tax exemption does not May mail, within 2 weeks of receiving the B (Form 99, 99-EZ, or 99-PF) that discuss include: request, a copy of its application for tax the disclosure of that schedule. Any application for tax exemption filed exemption and annual information returns to You can only request Forms 99 or 99-EZ before July 15, 1987, unless the organization the requester instead of allowing an inspection. for section 527 organizations for tax years filing the application had a copy of the May charge the requester for copying and beginning after June 3, 2. application on July 15, 1987; actual postage costs only if the requester In the case of a tax-exempt organization consents to the charge. You may inspect a return, report, notice, or exemption application at an IRS office free of other than a private foundation, the name and An organization that has a permanent charge. You may also obtain a copy of these address of any contributor to the organization; office, but has no office hours, or very limited items through the organization as discussed in or hours during certain times of the year, must the following section. Any material that is not available for public make its documents available during those inspection under section 614. periods when office hours are limited, or not Through the organization Annual information return includes: available, as though it were an organization Public inspection and distribution of An exact copy of the Form 99, or Form without a permanent office. returns and reports for a political 99-EZ filed by a tax-exempt organization as organization. Section 527 political required by section 633. Special rules relating to copies. organizations required to file Form 99, or Any amended return the organization files Form 99-EZ, must, in general, make their with the IRS after the date the original return is Time and place for providing copies in Form 8871, 8872, 99, or 99-EZ available for filed. response to requests made in-person. A public inspection in the same manner as The copy must include all information tax-exempt organization must: annual information returns of section 51(c) furnished to the IRS on Form 99, or Form Provide copies of required documents under organizations and 4947(a)(1) nonexempt 99-EZ, as well as all schedules, attachments section 614(d) in response to a request made charitable trusts are made available. See the and supporting documents, except for the in person at its principal, regional and district public inspection rules for tax-exempt name and address of any contributor to the offices during regular business hours. organizations below. Generally, Form 8871 organization. See the instructions for Schedule Provide such copies to a requester on the and Form 8872 are available for inspection and B (Form 99, 99-EZ, or 99-PF). day the request is made, except for unusual printing from the Internet. The website address circumstances (see below). Annual returns more than 3 years old. for both of these forms is An annual information return does not include Unusual circumstances. In the case of Note that a section 527 political any return after the expiration of 3 years from an in-person request, where unusual organization (and an organization filing Form the date the return is required to be filed circumstances exist so that fulfilling the request 99-PF) must disclose their Schedule B (Form (including any extension of time that has been on the same business day causes an 99, 99-EZ, or 99-PF), Schedule of granted for filing such return) or is actually unreasonable burden to the tax-exempt Contributors. See the instructions for filed, whichever is later. organization, the organization must provide the Schedule B. copies no later than the next business day If an organization files an amended return, The penalties discussed in General following the day that the unusual however, the amended return must be made Instruction K also apply to section 527 political circumstances cease to exist, or the 5th available for a period of 3 years beginning on organizations (Rev. Rul. 2-49, 2-44 business day after the date of the request, the date it is filed with the IRS. I.R.B. 43). whichever occurs first. Local or subordinate organizations. For Public inspection and distribution of rules relating to annual information returns of Unusual circumstances include: applications for tax exemption and annual local or subordinate organizations, see Requests received that exceed the information returns of tax-exempt Regulations section (d)-1(f)(2). organization s daily capacity to make copies; organizations. Under Regulations sections Requests received shortly before the end of Regional or district offices. A regional or (d)-1 through (d)-3, a regular business hours that require an district office is any office of a tax-exempt tax-exempt organization must: extensive amount of copying; or organization, other than its principal office, that Make its application for recognition of Requests received on a day when the has paid employees, whether part-time or exemption and its annual information returns organization s managerial staff capable of full-time, whose aggregate number of paid available for public inspection without charge at fulfilling the request is conducting special hours a week are normally at least 12. its principal, regional and district offices during duties, such as student registration or regular business hours. A site is not considered a regional or district attending an off-site meeting or convention, Make each annual information return office, however, if rather than its regular administrative duties. available for a period of 3 years beginning on The only services provided at the site Agents for providing copies. For rules the date the return is required to be filed further exempt purposes (such as day care, relating to use of agents to provide copies, see (determined with regard to any extension of health care or scientific or medical research); Regulations sections (d)-1(d)(1) time for filing) or is actually filed, whichever is and and (2). later. The site does not serve as an office for Provide a copy without charge, other than a management staff, other than managers who Request for copies in writing. A reasonable fee for reproduction and actual are involved solely in managing the exempt tax-exempt organization must honor a written postage costs, of all or any part of any function activities at the site. request for a copy of documents (or the application or return required to be made requested part) required under section 614(d) available for public inspection to any individual if the request: Special rules relating to public inspection. who makes a request for such copy in person 1. Is addressed to, and delivered by mail, Permissible conditions on public or in writing (except as provided in Regulations electronic mail, facsimile, or a private delivery inspection. A tax-exempt organization sections (d)-2 and -3). service, as defined in section 752(f), to a May have an employee present in the room Definitions principal, regional, or district office of the during an inspection. organization; and Tax-exempt organization is any Must allow the individual conducting the 2. Sets forth the address to which the copy organization that is described in section 51(c) inspection to take notes freely during the of the documents should be sent. or (d) and is exempt from taxation under inspection. section 51(a). The term tax-exempt Must allow the individual to photocopy the Time and manner of fulfilling written organization also includes any section document at no charge, if the individual requests. 4947(a)(1) nonexempt charitable trust or provides photocopying equipment at the place nonexempt private foundation that is subject to of inspection. IF the organization THEN the organization the reporting requirements of section 633. Organizations that do not maintain Application for tax exemption includes permanent offices. A tax-exempt Receives a written Must mail the copy of (except as described later): organization with no permanent office request for a copy, the requested Any prescribed application form (such as Must make its application for tax exemption documents (or the Form 123 or Form 124), and its annual information returns available for requested parts) within All documents and statements the IRS inspection at a reasonable location of its 3 days from the date it requires an applicant to file with the form, choice. receives the request. Any statement or other supporting document Must permit public inspection within a submitted in support of the application, and reasonable amount of time after receiving a General Instructions for Form 99 and Form 99-EZ -9-

4 prepayment and a requester does not enclose If the local or subordinate organization Mails the copy of the Is deemed to have payment with a request, an organization must receives a written request for a copy of its requested document, provided the copy on the receive consent from a requester before annual information return, it must fulfill the postmark date or private providing copies for which the fee charged for request by providing a copy of the group return delivery mark (if sent by copying and postage exceeds $2. in the time and manner specified in the certified or registered Documents to be provided by regional paragraph above, Request for copies in writing. mail, the date of registration or the date and district offices. Except as otherwise The requester has the option of requesting of the postmark on the provided, a regional or district office of a from the central or parent organization, at its sender s receipt). tax-exempt organization must satisfy the same principal office, inspection or copies of group rules as the principal office with respect to returns filed by the central or parent allowing public inspection and providing copies Requires payment in Is required to provide organization. The central or parent of its application for tax exemption and annual advance, the copies within 3 organization must fulfill such requests in the information returns. days from the date it time and manner specified in the paragraphs, receives payment. A regional or district office is not required, Special rules relating to public inspection and however, to make its annual information return Special rules relating to copies above. Receives a request or Is deemed to have available for inspection or to provide copies Failure to comply. If an organization fails payment by mail, received it 7 days after until 3 days after the date the return is to comply with the requirements specified in the date of the required to be filed (including any extension of this paragraph, the penalty provisions of postmark, absent time that is granted for filing such return) or is sections 6652(c)(1)(C), 6652(c)(1)(D), and evidence to the contrary. actually filed, whichever is later apply. Documents to be provided by local and Making applications and returns widely Receives a request Is deemed to have subordinate organizations. available. A tax-exempt organization is not transmitted by electronic received it the day the Applications for tax exemption. Except as required to comply with a request for a copy of mail or facsimile, request is transmitted otherwise provided, a tax-exempt organization its application for tax exemption or an annual successfully. that did not file its own application for tax information return if the organization has made exemption (because it is a local or subordinate the requested document widely available (see organization covered by a group exemption Receives a written Must notify the below). letter) must, upon request, make available for request without payment requester of the An organization that makes its application public inspection, or provide copies of, the or with an insufficient prepayment policy and for tax exemption and/or annual information application submitted to the IRS by the central payment, when payment the amount due within 7 return widely available must nevertheless or parent organization to obtain the group in advance is required, days from the date of make the document available for public exemption letter and those documents which the request s receipt. inspection as required under Regulations were submitted by the central or parent section (d)-1(a). organization to include the local or subordinate Receives consent from May provide a copy of organization in the group exemption letter. A tax-exempt organization makes its an individual making a the requested document However, if the central or parent application for tax exemption and/or an annual request, exclusively by electronic organization submits to the IRS a list or information return widely available if the mail (the material is directory of local or subordinate organizations organization complies with the Internet posting provided on the date the covered by the group exemption letter, the requirements and the notice requirements organization local or subordinate organization is required to given below. successfully transmits provide only the application for the group Internet posting. A tax-exempt the electronic mail). exemption ruling and the pages of the list or organization can make its application for tax directory that specifically refer to it. The local or exemption and/or an annual information return Request for a copy of parts of a subordinate organization must permit public widely available by posting the document on a document. A tax-exempt organization must inspection, or comply with a request for copies World Wide Web page that the tax-exempt fulfill a request for a copy of the organization s made in person, within a reasonable amount of organization establishes and maintains or by entire application for tax exemption or annual time (normally not more than 2 weeks) after having the document posted, as part of a information return or any specific part or receiving a request made in person for public database of similar documents of other schedule of its application or return. A request inspection or copies and at a reasonable time tax-exempt organizations, on a World Wide for a copy of less than the entire application or of day. See Regulations section Web page established and maintained by less than the entire return must specifically (d)-1(f) for further information. another entity. The document will be identify the requested part or schedule. Annual information returns. A local or considered widely available only if Fees for copies. A tax-exempt subordinate organization that does not file its (A) The World Wide Web page through organization may charge a reasonable fee for own annual information return (because it is which it is available clearly informs readers that providing copies. affiliated with a central or parent organization the document is available and provides that files a group return) must, upon request, instructions for downloading it; Before the organization provides the make available for public inspection, or provide documents, it may require that the individual (B) The document is posted in a format copies of, the group returns filed by the central requesting copies of the documents pay the that, when accessed, downloaded, viewed and or parent organization. fee. If the organization has provided an printed in hard copy, exactly reproduces the individual making a request with notice of the However, if the group return includes image of the application for tax exemption or fee, and the individual does not pay the fee separate schedules with respect to each local annual information return as it was originally within 3 days, or if the individual pays the fee or subordinate organization included in the filed with the IRS, except for any information by check and the check does not clear upon group return, the local or subordinate permitted by statute to be withheld from public deposit, the organization may disregard the organization receiving the request may omit disclosure; and request. any schedules relating only to other (C) Any individual with access to the organizations included in the group return. Internet can access, download, view and print Form of payment (A) Request made in The local or subordinate organization must the document without special computer person. If a tax-exempt organization charges a permit public inspection, or comply with a hardware or software required for that format fee for copying, it must accept payment by request for copies made in person, within a (other than software that is readily available to cash and money order for requests made in reasonable amount of time (normally not more members of the public without payment of any person. The organization may accept other than 2 weeks) after receiving a request made fee) and without payment of a fee to the forms of payment, such as credit cards and in person for public inspection or copies and at tax-exempt organization or to another entity personal checks. a reasonable time of day. maintaining the World Wide Web page. (B) Request made in writing. If a In a case where the requester seeks Reliability and accuracy. In order for the tax-exempt organization charges a fee for inspection, the local or subordinate document to be widely available through an copying and postage, it must accept payment organization may mail a copy of the applicable Internet posting, the entity maintaining the by certified check, money order, and either documents to the requester within the same World Wide Web page must have procedures personal check or credit card for requests time period instead of allowing an inspection. for ensuring the reliability and accuracy of the made in writing. The organization may accept In such a case, the organization may charge document that it posts on the page and must other forms of payment. the requester for copying and actual postage take reasonable precautions to prevent Avoidance of unexpected fees. Where a costs only if the requester consents to the alteration, destruction or accidental loss of the tax-exempt organization does not require charge. document when posted on its page. In the -1- General Instructions for Form 99 and Form 99-EZ

5 event that a posted document is altered, requirement will be subject to a penalty for Disqualified Person destroyed or lost, the entity must correct or each day on which the offers or solicitations The vast majority of section 51(c)(3) or replace the document. are made. The penalty imposed for a particular 51(c)(4) organization employees and Notice requirement. If a tax-exempt day is the greater of $1, or 5% of the total contractors will not be affected by these rules. organization has made its application for tax cost of the offers and solicitations made on that Only the few influential persons within these exemption and/or an annual information return day that lacked the required disclosure (section organizations are covered by these rules when widely available, it must notify any individual 6711). they receive benefits, such as compensation, requesting a copy where the documents are fringe benefits, or contract payments. The IRS available (including the address on the World calls this class of covered individuals Wide Web, if applicable). If the request is made O. Disclosures Regarding Certain disqualified persons. A disqualified person, in person, the organization must provide such Transactions and Relationships regarding any transaction, is any person who notice to the individual immediately. If the In their annual returns on Schedule A (Form was in a position to exercise substantial request is made in writing, the notice must be 99 or 99-EZ), section 51(c)(3) influence over the affairs of the applicable provided within 7 days of receiving the request. organizations must disclose information tax-exempt organization at any time during a Tax-exempt organization subject to regarding their direct or indirect transfers to, 5-year period ending on the date of the harassment campaign. If the Director EO and other direct or indirect relationships with, transaction. Persons who hold certain powers, Examination (or designee) determines that the other section 51(c) organizations (except responsibilities, or interests are among those organization is being harassed, a tax-exempt other section 51(c)(3) organizations) or who are in a position to exercise substantial organization is not required to comply with any section 527 political organizations (section influence over the affairs of the organization. request for copies that it reasonably believes is 633(b)(9)). This provision helps prevent the This would include, for example, voting part of a harassment campaign. diversion or expenditure of a section 51(c)(3) members of the governing body, and persons organization s funds for purposes not intended holding the power of: Whether a group of requests constitutes a by section 51(c)(3). All section 51(c)(3) Presidents, chief executive officers, or chief harassment campaign depends on the relevant organizations must maintain records regarding operating officers. facts and circumstances such as: all such transfers, transactions, and Treasurers and chief financial officers. A sudden increase in requests; an relationships. See also General Instruction K extraordinary number of requests by form A disqualified person also includes certain regarding penalties. letters or similarly worded correspondence; family members of a disqualified person, and hostile requests; evidence showing bad faith or 35% controlled entities of a disqualified person. deterrence of the organization s exempt P. Intermediate Sanction Who is not a disqualified person? The rules purpose; prior provision of the requested Regulations Excess Benefit also clarify which persons are not considered documents to the purported harassing group; to be in a position to exercise substantial and a demonstration that the organization Transactions influence over the affairs of an organization. routinely provides copies of its documents Final Regulations that interpret the benefit They include: upon request. limitation provisions of section 4958 were An employee who receives benefits that total A tax-exempt organization may disregard issued in January of 22. These rules are less than the highly compensated amount any request for copies of all or part of any important to the exempt organization ($9, in 24) and who does not hold the document beyond the first two received within community as a whole, and for ensuring executive or voting powers just mentioned; is any 3-day period or the first four received compliance in this area. The new rules provide not a family member of a disqualified person; within any 1-year period from the same a roadmap by which an organization may steer and is not a substantial contributor; individual or the same address, regardless of clear of situations that may give rise to Tax-exempt organizations described in whether the Director EO Examination (or inurement. section 51(c)(3); and designee) has determined that the organization Section 51(c)(4) organizations with respect Under section 4958, any disqualified person is subject to a harassment campaign. to transactions engaged in with other section who benefits from an excess benefit 51(c)(4) organizations. A tax-exempt organization may apply for a transaction with an applicable tax-exempt determination that it is the subject of a organization is liable for a 25% tax on the Who else may be considered a disqualified harassment campaign and that compliance excess benefit. The disqualified person is also person? Other persons not described above with requests that are part of the campaign liable for a 2% tax on the excess benefit if can also be considered disqualified persons, would not be in the public interest by the excess benefit is not corrected by a certain depending on all the relevant facts and submitting a signed application to the Director date. Also, organization managers who circumstances. EO Examination (or designee) for the area participate in an excess benefit transaction knowingly, willfully, and without reasonable Facts and circumstances tending to where the organization s principal office is cause are liable for a 1% tax on the excess show substantial influence: located. benefit, not to exceed $1, for all The person founded the organization. In addition, the organization may suspend participating managers on each transaction. The person is a substantial contributor to the compliance with any request it reasonably organization under the section 57(d)(2)(A) believes to be part of the harassment Applicable Tax-Exempt Organization definition, only taking into account contributions campaign until it receives a response to its These rules only apply to certain applicable to the organization for the past 5 years. application for a harassment campaign section 51(c)(3) and 51(c)(4) organizations. The person s compensation is primarily determination. However, if the Director EO An applicable tax-exempt organization is a based on revenues derived from activities of Examination (or designee) determines that the section 51(c)(3) or a section 51(c)(4) the organization that the person controls. organization did not have a reasonable basis organization that is tax-exempt under section The person has or shares authority to control for requesting a determination that it was 51(a), or was such an organization at any or determine a substantial portion of the subject to a harassment campaign or time during a 5-year period ending on the day organization s capital expenditures, operating reasonable belief that a request was part of the of the excess benefit transaction. budget, or compensation for employees. campaign, the officer, director, trustee, The person manages a discrete segment or employee, or other responsible individual of the An applicable tax-exempt organization does activity of the organization that represents a organization remains liable for any penalties for not include: substantial portion of the activities, assets, not providing the copies in a timely fashion. A private foundation as defined in section income, or expenses of the organization, as See Regulations section (d)-3. 59(a). compared to the organization as a whole. A governmental entity that is exempt from The person owns a controlling interest (or not subject to) taxation without regard to (measured by either vote or value) in a N. Disclosures Regarding Certain section 51(a) or relieved from filing an annual corporation, partnership, or trust that is a Information and Services return under Regulations section disqualified person. Furnished (g)(6). The person is a nonstock organization Certain foreign organizations. controlled directly or indirectly by one or more A section 51(c) organization that offers to sell disqualified persons. or solicits money for specific information or a An organization is not treated as a section routine service for any individual that could be 51(c)(3) or 51(c)(4) organization for any Facts and circumstances tending to obtained by such individual from a federal period covered by a final determination that the show no substantial influence: government agency free or for a nominal organization was not tax-exempt under section The person is an independent contractor charge must disclose that fact conspicuously 51(a), but only if the determination was not whose sole relationship to the organization is when making such offer or solicitation. Any based on private inurement or one or more providing professional advice (without having organization that intentionally disregards this excess benefit transactions. decision-making authority) with respect to General Instructions for Form 99 and Form 99-EZ -11-

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7 OMB No Form 99 Return of Organization Exempt From Income Tax Under section 51(c), 527, or 4947(a)(1) of the Internal Revenue Code (except private foundations) 215 Do not enter social security numbers on this form as it may be made public. Open to Public Department of the Treasury Internal Revenue Service Information about Form 99 and its instructions is at Inspection A For the 215 calendar year, or tax year beginning 6/1, 215, and ending 5/31, 2 16 B Check if applicable: Address change C Name of organization MERCYHURST UNIVERSITY Doing business as D Employer identification number Name change Number and street (or P.O. box if mail is not delivered to street address) Room/suite E Telephone number Initial return Final return/terminated 51 East 38th Street City or town, state or province, country, and ZIP or foreign postal code Amended return Erie, PA, G Gross receipts $ 145,868,741 Application pending F Name and address of principal officer: David P Myron H(a) Is this a group return for subordinates? Yes No 51 East 38th Street, Erie, PA H(b) Are all subordinates included? Yes No I Tax-exempt status: 51(c)(3) 51(c) ( ) (insert no.) 4947(a)(1) or 527 If No, attach a list. (see instructions) J Website: H(c) Group exemption number K Form of organization: Corporation Trust Association Other L Year of formation: 1926 M State of legal domicile: PA Part I Summary 1 Briefly describe the organization s mission or most significant activities: Mercyhurst University is a fully accredited, Activities & Governance Revenue Expenses Net Assets or Fund Balances four-year, Catholic comprehensive institution founded by the Sisters of Mercy in The Erie (Pa.) campus offers sixty-four (Continued on Schedule O, Statement 1) 2 Check this box if the organization discontinued its operations or disposed of more than 25% of its net assets. 3 Number of voting members of the governing body (Part VI, line 1a) Number of independent voting members of the governing body (Part VI, line 1b) Total number of individuals employed in calendar year 215 (Part V, line 2a) ,51 6 Total number of volunteers (estimate if necessary) a Total unrelated business revenue from Part VIII, column (C), line a 152,636 b Net unrelated business taxable income from Form 99-T, line b 135,664 Prior Year Current Year 8 Contributions and grants (Part VIII, line 1h) ,182,815 14,7,258 9 Program service revenue (Part VIII, line 2g) ,553,86 122,375,16 1 Investment income (Part VIII, column (A), lines 3, 4, and 7d) ,436, , Other revenue (Part VIII, column (A), lines 5, 6d, 8c, 9c, 1c, and 11e) ,41 35, Total revenue add lines 8 through 11 (must equal Part VIII, column (A), line 12) 134,289, ,737,32 13 Grants and similar amounts paid (Part IX, column (A), lines 1 3) ,293,87 51,99, Benefits paid to or for members (Part IX, column (A), line 4) Salaries, other compensation, employee benefits (Part IX, column (A), lines 5 1) 43,731,132 44,584,79 16a Professional fundraising fees (Part IX, column (A), line 11e) b Total fundraising expenses (Part IX, column (D), line 25) 921, Other expenses (Part IX, column (A), lines 11a 11d, 11f 24e) ,154,699 45,939, Total expenses. Add lines (must equal Part IX, column (A), line 25). 137,178, ,623, Revenue less expenses. Subtract line 18 from line ,889,495-3,886,61 Beginning of Current Year End of Year 2 Total assets (Part X, line 16) ,696,3 134,866,46 21 Total liabilities (Part X, line 26) ,134,97 41,919, Net assets or fund balances. Subtract line 21 from line Part II Signature Block Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than officer) is based on all information of which preparer has any knowledge. Sign Here Paid Preparer Use Only Signature of officer David Myron, Chief Financial Officer Type or print name and title Print/Type preparer s name Preparer's signature Date 99,561,33 Date PTIN Check if self-employed 92,946,615 Firm s name Firm's EIN Firm's address Phone no. May the IRS discuss this return with the preparer shown above? (see instructions) Yes No For Paperwork Reduction Act Notice, see the separate instructions. Cat. No Y Form 99 (215)

8 Form 99 (215) Page 2 Part III Statement of Program Service Accomplishments Check if Schedule O contains a response or note to any line in this Part III Briefly describe the organization s mission: Consistent with its Catholic identity and Mercy heritage, Mercyhurst University educates women and men in a culture where faith and reason flourish together, where the beauty and power of the liberal arts combine with an appreciation for the dignity of work and a commitment to serving others. Confident in the strength of its student-faculty bonds, the University community is inspired by (Continued on Schedule O, Statement 2) 2 Did the organization undertake any significant program services during the year which were not listed on the prior Form 99 or 99-EZ? Yes No If Yes, describe these new services on Schedule O. 3 Did the organization cease conducting, or make significant changes in how it conducts, any program services? Yes No If Yes, describe these changes on Schedule O. 4 Describe the organization's program service accomplishments for each of its three largest program services, as measured by expenses. Section 51(c)(3) and 51(c)(4) organizations are required to report the amount of grants and allocations to others, the total expenses, and revenue, if any, for each program service reported. 4 a (Code: ) (Expenses $ 73,394,844 including grants of $ 42,956,426 ) (Revenue $ 97,924,674 ) During the academic year there were 3746 students enrolled in undergraduate, graduate, and associate degree programs on two campuses, Main (2524) and North East (756), and at two separate learning centers, Corry (49) and BTW (83). The student population was comprised of 2948 full-time and 477 part-time undergraduate students along with 169 full-time and 146 part-time graduate students. 115 total degrees were conferred in the following categories; Baccalaureate 596, Associate 224, Masters 17, Post-baccalaureate 5, UG certificate 65 and Grad certificates 18. There are a total of 179 full-time and 78 part-time faculty and an offering of 9 graduate programs, 64 undergraduate majors with 48 minors and 54 concentrations on the Main campus, 23 associate degree programs on the North East campus and 4 associate degree programs at the University's two educational learning centers. Additionally, there are 8 undergraduate certificate programs, 9 advanced certificate programs and 12 graduate certificate programs. 4b (Code: ) (Expenses $ 14,29,998 including grants of $ ) (Revenue $ 2,886,239 ) Auxiliary services includes student housing, foodservice, the university bookstore and the university's conference center on the Main and North East campuses. The total student population in university housing was 1,671 on the Main campus and 156 on the North East campus for the fiscal year students had paid meal plans while many other students and employees dine in university facilities on a pay-as-you-go basis. The university maintains a bookstore on the Main campus as well as the North East campus. The university has conference center facilities at both campuses and regularly hosts outside groups and organizations. 4 c (Code: ) (Expenses $ 15,72,29 including grants of $ 8,96,814 ) (Revenue $ 1,214,898 ) Mercyhurst University has 629 student-athletes making up 24 athletic teams, 12 women and 12 men, competing at both the NCAA Division I (Men's and Women's Hockey) and Division II levels. These teams are members of six different athletic conferences, with the preponderance of sports being affiliated with the Pennsylvania State Athletic Conference. The athletic department is also supported by athletic administration, athletic training, the recreational training facility and the department of sports information. The athletic department is comprised of 12 full-time head coaches and 12 part-time head coaches along with 11 full-time and 39 part-time assistant coaches. Athletic administration and support includes another 87 full- and part-time and student employees and the department also utilizes over 4 volunteers. The North East campus sponsors another 9 sports teams, 5 men and 4 women, and are members of the National Junior College Athletic Association. North East athletics includes another 151 student athletes along with 9 full-time coaches and 13 part-time coaches/graduate assistants, 2 full-time administrative personnel and 2 volunteers. 4d 4e Other program services (Describe in Schedule O.) See Schedule O, Statement 3 (Expenses $ 28,787,4 including grants of $ 46,422 ) (Revenue $ 2,157,378 ) Total program service expenses 131,914,136 Form 99 (215)

9 Form 99 (215) Page 3 Part IV Checklist of Required Schedules 1 Is the organization described in section 51(c)(3) or 4947(a)(1) (other than a private foundation)? If Yes, complete Schedule A Is the organization required to complete Schedule B, Schedule of Contributors (see instructions)? Did the organization engage in direct or indirect political campaign activities on behalf of or in opposition to candidates for public office? If Yes, complete Schedule C, Part I Section 51(c)(3) organizations. Did the organization engage in lobbying activities, or have a section 51(h) election in effect during the tax year? If Yes, complete Schedule C, Part II Is the organization a section 51(c)(4), 51(c)(5), or 51(c)(6) organization that receives membership dues, assessments, or similar amounts as defined in Revenue Procedure 98-19? If Yes, complete Schedule C, Part III Did the organization maintain any donor advised funds or any similar funds or accounts for which donors have the right to provide advice on the distribution or investment of amounts in such funds or accounts? If Yes, complete Schedule D, Part I Did the organization receive or hold a conservation easement, including easements to preserve open space, the environment, historic land areas, or historic structures? If Yes, complete Schedule D, Part II Did the organization maintain collections of works of art, historical treasures, or other similar assets? If Yes, complete Schedule D, Part III Did the organization report an amount in Part X, line 21, for escrow or custodial account liability, serve as a custodian for amounts not listed in Part X; or provide credit counseling, debt management, credit repair, or debt negotiation services? If Yes, complete Schedule D, Part IV Did the organization, directly or through a related organization, hold assets in temporarily restricted endowments, permanent endowments, or quasi-endowments? If Yes, complete Schedule D, Part V If the organization s answer to any of the following questions is Yes, then complete Schedule D, Parts VI, VII, VIII, IX, or X as applicable. a Did the organization report an amount for land, buildings, and equipment in Part X, line 1? If Yes, complete Schedule D, Part VI a b Did the organization report an amount for investments other securities in Part X, line 12 that is 5% or more of its total assets reported in Part X, line 16? If Yes, complete Schedule D, Part VII b c Did the organization report an amount for investments program related in Part X, line 13 that is 5% or more of its total assets reported in Part X, line 16? If Yes, complete Schedule D, Part VIII c d Did the organization report an amount for other assets in Part X, line 15 that is 5% or more of its total assets reported in Part X, line 16? If Yes, complete Schedule D, Part IX d e Did the organization report an amount for other liabilities in Part X, line 25? If Yes, complete Schedule D, Part X 11e f Did the organization s separate or consolidated financial statements for the tax year include a footnote that addresses the organization s liability for uncertain tax positions under FIN 48 (ASC 74)? If Yes, complete Schedule D, Part X. 11f 12 a Did the organization obtain separate, independent audited financial statements for the tax year? If Yes, complete Schedule D, Parts XI and XII a b Was the organization included in consolidated, independent audited financial statements for the tax year? If Yes, and if the organization answered No to line 12a, then completing Schedule D, Parts XI and XII is optional 12b 13 Is the organization a school described in section 17(b)(1)(A)(ii)? If Yes, complete Schedule E a Did the organization maintain an office, employees, or agents outside of the United States? a b Did the organization have aggregate revenues or expenses of more than $1, from grantmaking, fundraising, business, investment, and program service activities outside the United States, or aggregate foreign investments valued at $1, or more? If Yes, complete Schedule F, Parts I and IV b 15 Did the organization report on Part IX, column (A), line 3, more than $5, of grants or other assistance to or for any foreign organization? If Yes, complete Schedule F, Parts II and IV Did the organization report on Part IX, column (A), line 3, more than $5, of aggregate grants or other assistance to or for foreign individuals? If Yes, complete Schedule F, Parts III and IV Did the organization report a total of more than $15, of expenses for professional fundraising services on Part IX, column (A), lines 6 and 11e? If Yes, complete Schedule G, Part I (see instructions) Did the organization report more than $15, total of fundraising event gross income and contributions on Part VIII, lines 1c and 8a? If Yes, complete Schedule G, Part II Did the organization report more than $15, of gross income from gaming activities on Part VIII, line 9a? If Yes, complete Schedule G, Part III Yes No Form 99 (215)