The Internal Revenue Code divides organizations exempt under Section 501(c)(3) into two distinct tax categories - public charities and private foundations. A Section 501(c)(3) organization is classified as a public charity (1) by being a certain kind of institution, such as a church, university, or hospital, (2) by meeting one of two mathematical public support tests, or (3) by qualifying as a supporting organization to another public charity. Public charities are subject to substantially less regulation under federal tax law than private foundations, and therefore qualifying as a public charity is usually preferable. We help our clients obtain and maintain public charity status, and take advantage of the greater flexibility of operating as a public charity.
This letter could be important in the event that a Model C fiscal sponsor disburses grant funds for the benefit of a grantee, not by cash grants to the grantee, but by writing checks directly to the grantee’s vendors.
Short form of Fiscal Sponsorship Grant Agreement between a fiscal sponsor and a Model C fiscally sponsored project.
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