How does a nonprofit supporting organization, compare to a private foundation?
A supporting organization is actually a private foundation as well, but it is treated, for tax purposes, as a public charity. This is because, under the tax law, it is so closely connected to at least one public charity that it is almost a part of that organization. The connection can be achieved by having a majority of the Foundation’s board appointed by the public charity. Or, the purpose of the Foundation can be to support specific projects of the public charity, in such amounts that the government can be reasonably assured that the public charity will be supervising the activities of the Foundation. The special tax status is granted because Congress is comfortable that the public will be protected, through the oversight and control by a public charity. Be careful, here, however, because the IRS has increasingly scrutinized both the applications of new supporting organizations, and their operations, just to be sure that there is such active oversight and control.
Related Questions
- I Work for a Nonprofit Organization and We are Focused on a Specific Environmental "Hot Spot" or Issue. How Can I get the Imaging Foundation to Help with this Goal?
- How does a private foundation determine whether a grantee is a supporting organization subject to the Pension Protection Act of 2006 provisions?
- What are the benefits of starting a supporting organization versus a private foundation?
