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The legal and tax implications for community foundations accepting donations from private foundations, and qualifying distributions of taxable expenditures. Additional insight into converting a private foundation into a supporting organization of a community foundation.
Summary
A supporting organization qualifies as a public charity because it has a close relationship with another publicly supported section 501(c)(3) organization. Based on the relationship of the supporting organization to the public charity it supports, a supporting organization will be…
This chart outlines all provisions that affect the operations of supporting organizations.
Affected transactions: Returns filed for taxable years ending after August 17, 2006.
Are all supporting organizations required to file Form 990?
Yes. Prior to the enactment of the Pension Protection Act of 2006, public charities that normally received less than $25,000 in annual gross…
In Notice 2007-21, the Treasury Department and IRS requested comments on issues relating to the organization and operation of donor-advised funds and supporting organizations, to be included in a study of these organizations. The resulting report includes a detailed discussion of the legal…
With tighter restrictions on grants to supporting organizations after the PPA, reclassifying into a public charity with fewer restrictions is an option worth considering.
Supporting organizations that meets the public support test can be reclassified as a public charity under section 509(a…
Most community foundations operate a competitive grantmaking program that is responsive to their community—meaning they make grants in response to requests from those seeking grants. At times, however, you may ask: Is this approach the most effective use of our philanthropic dollars?
Some…
Question:May a corporate foundation allow corporate board members who do not sit on the foundation’s board to designate grants from the corporate foundation?
Answer:No. All grants from the corporate foundation must be approved by the corporate foundation’s board of directors. No individual—…
Question: Our foundation has been funding a local nonprofit for the last ten years. The nonprofit has one full-time employee and an annual operating budget of about $300,000. The nonprofit recently requested a $50,000 grant for operating expenditures or it will have to close down immediately. Even…
Question: We are trying to decide how to structure our grants programs between our direct-giving program and our corporate foundation. Are there any general guidelines to help us?
Answer: Many factors influence how to allocate grantmaking programs between a corporate giving program and…