Are we a mission society?

We head a 501(c)3 non-profit organization that supports missionaries and missions in other countries so during our annual preparations to file vital paperwork with the IRS, I discovered a clause in the IRS’s Form 990 and Form 990EZ instructions that indicated that we might not need to file since we’re a mission society.  It says:

A mission society sponsored by, or affiliated with, one or more churches or church denominations, if more than half of the society’s activities are conducted in, or directed at, persons in foreign countries.

We fit the category of sponsored by one or more churches and over half our activities are conducted in foreign countries so I set about trying to discover how the IRS defines a “Mission Society.”

I discovered this great response example (download the letter as a PDF here) from Lois Lerner the director of Exempt Organizations with the IRS. In this letter Lerner clearly explains why the example organization does NOT fit the requirements of a “mission society.” Here’s the explanation by Lerner:

Mission societies who are sponsored by one or more churches must have some institutional
relationship with and provide some kind of financial accounting to the churches who are
sponsoring them. Section 1.6033-2(h)(2) of the Regulations provides three instances when an
organization can be considered to be an affiliate of one or more churches or church
denominations. In applying these indicants to you, we found:

  1. (i) Your organization is not covered by a group exemption letter,
  2. (ii) You are not operated, supervised, or controlled by a church or convention of churches, and
  3. (iii) You do not pass the facts and circumstances test detailed in section 1.6033-2(h)(3) of the Regulations because your organization does not meet any of the listed affiliation factors.

• Your Articles of Incorporation and Bylaws do not show any institutional
relationship such as sharing common religious doctrines, principies, practices,
common name, or church affirmation.
• Your governing documents do not mandate common board members with
sponsored or affiliated churches.
• Your name does not imply a connection with any church.
• No church or church association has the authority to appoint or remove any of
your board members.
• You have not shown that any churches or church associations receive annual
reports on your financial and general operations. And,
• Your enabling document does not require your assets to be distributed to any
sponsored or affiliated churches.

Based on the factors as detailed above, we deny your request for exception from filing Form 990 as a mission society.

Thanks to the IRS’s thorough explanation, I know that we also do not fit what the IRS calls a “missions society.” We are doing the activities of a mission society but we’re not as tightly overseen by a church or churches as they require for not filling out the Form 990/990ez. So, I say thanks to Lerner and her letter that saved me from thinking we didn’t need to fill out the 990 or 990EZ…now I’m off to fill out my Forms and get them sent in to the IRS!