Public Support Test

SEE ALSO: Organizational Test

From Grantspace.org[1]:

The IRS uses the public support test to check if a nonprofit receives substantial support from the general public, as outlined by Section 509(a) of the Internal Revenue Code. This test determines if a nonprofit is a private foundation or a public charity.

According to the IRS, an organization is a publicly supported charity if it meets one of two tests:

1. The organization receives a substantial part of its support in the form of contributions from publicly supported organizations, governmental units, and/or the general public. Example: A human service organization whose revenue is generated through widespread public fundraising campaigns, federated fundraising drives, or government grants is a publicly supported charity.

2. The organization receives no more than one-third of its support from gross investment income and more than one-third of its support from contributions, membership fees, and gross receipts from activities related to its exempt functions. Examples: A membership-fee organization, such as parent-teacher organization, or an arts group with box office revenue is a publicly supported charity.

Facts & Circumstances Support Test

The Facts & Circumstances Support Test is for organizations failing to meet the One-Third Support Test. If an organization fails to meet the One-Third Support Test, it may still be treated as a publicly-supported organization if it normally receives a substantial part of its support from governmental units, from direct or indirect contributions from the general public, or from a combination of these sources.

Resources

IRS.gov: Public Support Test

IRS.gov Section 509(a) Supporting Organizations

IRS.gov: Schedule A Instructions

IRS.gov: Advance Ruling Process Elimination Public Support Test

Nonprofit Accounting Basics: Schedule A: The key to Maintaining Public Charity Status

SharingLaw.net:Public Support Test for 501c3 Organizations

Foundation Group: Understanding the 501(c)(3) Public Support Test

Adler & Colvin:QUALIFYING FOR PUBLIC CHARITY STATUS: The Section 170(b)(1)(A)(vi) and 509(a)(1) Test and the Section 509(a)(2) Test

Notes

  1. Jump up↑ http://www.grantspace.org/Tools/Knowledge-Base/Nonprofit-Management/Establishment/Public-support-test