"Publicly Supported" - Exempt Operating Foundation |
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Publicly supported means that the foundation normally receives:
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A substantial part of its support (other than income from its exempt function) from governmental units or from direct or indirect contributions from the general public, or
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More than a third of its support from governmental units, certain publicly supported charities, and persons other than disqualified persons, in any combination of gifts, grants, contributions, membership fees, and gross receipts from activities that are not an unrelated trade or business (but only including such gross receipts from anyone person, or bureau or similar agency of a governmental unit, that are not more than the greater of $5,000 or one percent of the foundation’s support for the tax year), and does not normally receive more than a third of its support from gross investment income plus any excess of unrelated business taxable income over the tax on unrelated business income.
A substantial part of the foundation’s support, for purposes of (1) above, generally is a third of its total support, based on a five year computation period that consists of the current tax year and the four years immediately preceding the current year. However, if the foundation does not meet this one-third support test, it may still qualify as deriving a substantial part of its support from governmental units and from the general public if it:
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Normally receives at least ten percent of its support from these sources,
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Satisfies the attraction of public support requirement by being organized and operated to attract new and additional public or governmental support on a continuous basis, and
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Satisfies some or all of five public support factors:
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Percentage of financial support
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Sources of support
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Representative governing body
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Availability of public facilities or services
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Additional factors pertinent to membership organizations
Substantial public support is discussed in detail in Publication 557, Tax-Exempt Status for Your Organization.
Return to Life Cycle of a Private Foundation
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Page Last Reviewed or Updated: January 06, 2009