Exempt Organizations Annual Reporting Requirements - Form 990, Schedule R: Meaning of "Control" for Organizations Without Owners


In deciding if an organization is related for purposes of Schedule R, Form 990, how is control defined for nonprofit organizations and organizations without owners or persons with beneficial interests?

There is a parent/subsidiary relationship between such organizations if:

  • One organization (the parent) has the power to remove and replace, or a continuing power to appoint or elect, a majority of the directors or trustees of the other organization (the subsidiary).
  • There is a management or board overlap situation where officers, directors, trustees, employees or agents of the parent constitute a majority of the directors or trustees of the subsidiary.

There is a brother/sister relationship between such organizations if the same persons constitute a majority of the members of the governing body of both organizations or if the same entity or person controls both organizations.

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