Public Support Test

For the great majority of our public charity clients, it is essential that we are annually focused upon their public support test calculation because the consequences of failing such (reclassification as a private foundation) are generally to be avoided. We certainly have developed an expertise in addressing the very complex issues confronting all the different types of public charities, including definitional entities (churches / schools / hospitals), §509(a)(1) public charities, §509(a)(2) public charities and supporting organizations (§509(a)(3) organizations ). Over the course of a year, we look at hundreds of Forms 990 prepared by others than ourselves, and by far, the most erroneous reporting that we observe, is on Schedule A of the Form 990. Of all the webinars that we have previously conducted, the one with significantly more participant questions than any other was the webinar which we conducted addressing Schedule A reporting issues.

Some of the value-added services we are able to provide in the public support test area include the following:

  • Making the facts and circumstances argument for charitable entities that initially “fail” the public support test.
  • Flipping back and forth between the 509(a)(1) and 509(a)(2) public support tests to ensure that our charitable organization client is considered to be a public charity.
  • Preparing of memoranda addressing various supporting organization issues, including unusual grants, classification of revenue streams as public support, and conversions to public charities.
  • Preparing of memoranda addressing whether a particular entity qualifies as a church, school, or hospital, for example, we have numerous times had to apply the 14-factor test to determine whether a religious entity qualified as a church so such entity was not required to annually file a Form 990.
  • Analyzing whether an entity qualifies as a governmental instrumentality or not.
  • Securing a determination from the Internal Revenue Service that a particular entity qualified as an affiliate of a governmental organization.