USA Swimming has released its Form 990 for the fiscal year.
The Form 990 is the annual information return filed by nonprofit organizations with the Internal Revenue Service (IRS), and it provides information to the public and the IRS. In addition to supporting a nonprofit’s tax-exempt status, organizations use the Form 990 to share information about its programs and mission with the public. Most tax-exempt organizations must file a Form 990, including USA Swimming, Inc. and USA Swimming Foundation, Inc., under section 501(c)(3). The annual form is due in the fifth month after the organization’s fiscal year ends, with the option of a single six-month extension. An independent tax firm prepares the 990 from the audited financial statements and audited general ledgers.
The Form 990 is meaningful and valuable to our organizations for a variety of reasons. The Form 990:
• Provides financial information to accompany our annual independent Audits, including statements of revenue and expenses, beginning and ending balance sheets, and other statements to support responsible financial stewardship of members’ and donors’ investments in the organizations.
• Illustrates to the public and IRS that the organizations continue to serve the mission for which the IRS granted them tax-exempt status by reporting their activities and accomplishments.
• Demonstrates best governance practices and fiduciary responsibility by reporting independent and involved leadership, documenting decisions, and following written policies and procedures that validate accountability and transparency.
The Form 990 is separate from the organization’s annual Audit. An independent external audit firm annually completes an independent Audit of both USA Swimming and USA Swimming Foundation. The Audit follows generally accepted auditing standards (GAAS) and generally accepted accounting principles (GAAP). These are the accounting standards and rules by which companies/organizations record and report their financial activities. A GAAP Audit is an independent examination of a company’s financial statements and accounting records to ensure compliance with GAAP performed by an independent audit firm. The yearly Audit gives an opinion that concludes whether the entity’s financial statements are fairly presented in all material respects in accordance with GAAP and can be relied upon. Both of our 2023 Audits received clean, unqualified opinions.
Although the annual Audit and the Form 990 use the same financials and balances, the required IRS tax code for the Form 990 and the required Generally Accepted Accounting Principles (GAAP) for the Audit have different reporting requirements.
The most significant reporting difference between GAAP and the tax code for our organizations is around investment income. The tax code reports the actual transactional gain but not the unrealized gain. The tax code says not to recognize any investment income/loss (gain/loss) until it’s settled (realized). So even though our investments may be over the market with gains (unrealized if not sold/settled), the tax code is not going to recognize the “mark to market” gain as revenue until we’ve sold that position/fund/stock/bond, and we finalize that gain (or loss).
For example, in 2023, USA Swimming and USA Swimming Foundation had $3.64M and $2.46M of unrealized “mark to market” investment gains (shown in Part XI Line 5). GAAP allows that revenue to be recognized on the Audit, whereas the Form 990 does not until/unless it is sold or realized. The Form 990 Core Form Part XI provides a reconciliation of total net assets.
Another less material difference between GAAP and tax code reporting for our organizations is the treatment of donated services and the use of facilities. For tax reporting purposes, donations of incomplete gifts and donations of time are not recognized as charitable deductions because there’s no actual asset transferred. Some examples related to our organizations include the donated time of USA Swimming employees working on USA Swimming Foundation programs and service-related VIK.
Lastly, GAAP requires supporting/related entities to be reported on a consolidated basis, whereas the tax code requires a separate Form 990 tax return for each applicable nonprofit entity. Thus, GAAP treats the USA Swimming Foundation as a supporting/related entity to USA Swimming, which is why the USA Swimming Audit is reported on a consolidated basis with the USA Swimming Foundation, \ whereas both USA Swimming and the USA Swimming Foundation each file their own Form 990. The referenced Audit totals are available in the Audit’s “Consolidating Statement of Activities and Changes in Net Assets” statement.
The following summary of our 2023 financials aims to provide our membership and stakeholders with a transparent and clear understanding of our fiscal position. Overall, 2023 saw total revenue growth compared to the year prior enabling our continued support of programming from the grassroots to the elite level and paving the way for the execution of the 2024 Olympic Trials and Olympic Games.
Below are highlights from the USA Swimming IRS Form 990, including references to the corresponding figures published earlier in the year in the Audit:
• Net assets increased by $1.51 million to $23,093,959 in 2023 (Part I, Line 22). Compare to corresponding net asset increase and balance within the Audit’s “Consolidating Statement of Activities and Changes in Net Assets” statement, pages 26-27, as well as pages 1 2 of the “2023 Year End Financial Results Highlights.”
• 2023 total revenue per the 990 was $38,460,900 (Part I, Line 12). Compare to total revenue per the Audit of $41,520,284. The $3.06 million reconciliation between the tax return and Audit is accounted for in the following reporting differences between tax code and GAAP:
• $3.64M Unrealized investment gains
• $65K Donated services and use of facilities
• ($66K) Investment expenses
• ($582K) Other misc. reporting differences between tax code and GAAP
• 2023 total expense per the 990 was $40,593,508 (Part I, Line 18). Compare to total expense per the Audit of $40,010,098. The $583K reconciliation between the tax return and Audit is accounted for in the following reporting differences between tax code and GAAP:
• $65K Donated services and use of facilities
• ($66K) Investment expenses
•($582K) Other misc. reporting differences between tax code and GAAP
Sincerely,
Kenneth Chung
USA Swimming Board of Directors, Vice Chair Fiscal Oversight
Eric Skufca
USA Swimming Chief Financial Officer