How to Calculate the Public Support Test
A Chapter in Mastering Foundation Law:
The Council on Foundations Compendium of Legal Resources
In the United States, organizations that qualify to receive charitable tax-deductible contributions are described in Section 501(c)(3) of the Tax Code. These organizations are divided into two main categories—public charities and private foundations. The IRS presumes that a charitable entity is a private foundation unless it can demonstrate that it should be classified as a public charity. An organization may achieve public charity status by meeting a legal definition (e.g. churches, schools, and medical institutions), a public support test, or some legally defined relationship with another publicly supported charity.
For even the most math-phobic readers, this guide provides a convenient reference that explains the public support test as well as tools to help calculate a charity’s percentage of public support.
This chapter is divided into eight parts and four appendices:
The Public Support Test: A General Explanation
This section provides an overview of the test to show how the parts fit together.
Total Support: The Denominator
This section looks at the kinds of contributions that are—and are not—included in the total support number.
Public Support: The Numerator
This section shows the elements of total support that count as public support.
Income Excluded from Both Parts of the Public Support Fraction
This section discusses income that is excluded from the numerator and denominator of the public support fraction.
"Normally": Defining the Period of Time
This section addresses the period of time the IRS considers in determining whether a charity is publicly supported and how long that status lasts.
"Substantial": How Much Public Support is Enough?
This section explores the different ways that charities can prove their public support is substantial.
Incorporating Fundraising Events in the Public Support Fraction
This section reviews where to fit fundraising income into the public support fraction.
Consequences of Failing the Public Support Test
This section explains the consequences if a public charity fails to pass the public support test.
Appendices:
- Summary of the Public Support Test
- Tipping Resources
- Unusual Grants
- How to Calculate the Public Support Fraction Using Schedule A of Form 990
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