When you were entering revenue and expense information in Part I of your Form 990, and the related details in Parts VIII and IX, you may have noticed a few things that you record in your financial statements that don’t get reported on your Form 990. If donors, grantors, lenders, or other constituents are reviewing your financial information, they may look at both your financial statements and your Form 990. As a result, parts XI and XII of Schedule D provide a reconciliation between the two.
Note that you’re only required to fill out these parts if you were audited for the fiscal year you’re reporting on your Form 990; you would have answered “yes” to question 12a in Part IV of the base form of the Form 990. Parts XI and XII are optional if you were included in consolidated audited financial statements; you would have answered “yes” to question 12b in Form 990 Part IV. If you didn’t have your financial statements audited, you don’t need to fill these parts out, even if you prepared financial statements in accordance with SFAS 117/ASC 958.
Parts XI and XII are pretty straightforward. Start with the total revenue and total expenses on your audited financial statements, and enter in any relevant reconciling items. The resulting totals on line 5 of each section should tie out to lines 12 and 18 of Form 990, Part I, the summary of your profit and loss. For line 4a of each section, only include investment expenses that you netted against investment income in your audited financial statements. If you had program-related investment expenses, don’t include them in this reconciliation.
Schedule D can be found here, and more detailed instructions for filling it out are provided here. I am covering other parts of Schedule D in additional blog posts. (Part I | Part II | Part III | Part V | Parts VI-X)