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.
Areas of Focus
- Public support test calculations.
- Structuring gifts, grants, and contributions to avoid “tipping” into private foundation status.
- Compliance with federal and state nonprofit and tax-exemption law applicable to public charities, including Section 4958 of the Internal Revenue Code governing insider transactions.
- Fiscal sponsorship, permitting a charity to support charitable projects that do not yet have IRS recognition of tax-exempt status.
- Conducting fundraising activities and compliance with state charitable solicitation registration requirements.
- Donor-advised funds, allowing a donor to make immediate tax-deductible contributions while retaining the right to recommend future charitable distributions of the funds.
- Supporting organizations, which qualify as public charities by virtue of their close relationship with other charities that are publicly supported.
- Property tax exemptions.
Related Blog Posts (112)
November 11, 2020
Authors
David A. Levitt
Catherine Chang
Related Publications (2)
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April 2019
Practitioner Perspectives on Using Section 501(c)(4) Organizations for Charitable Lobbying: Realities and an Alternative
This paper, originally published in the NYU Journal of Legislation and Public Policy, discusses a wide array of issues arising from the use of Section 501(c)(4) social welfare organizations to conduct the lobbying necessary to advance charitable goals. The paper goes on to propose an innovative legislative change that would allow the creation of a…Authors
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May 2009
Excess Benefit Transactions Under Section 4958 and Revocation of Tax-Exempt Status
When charities are generous to the wrong people, they risk losing their tax-exempt status.Author
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Past Events
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Virtual Conference May 19, 2023
CalCPA Not-for-Profit Organizations Conference - Session: “Planning Opportunities with Different Tax-Exempt / Philanthropic Vehicles”
Ingrid Mittermaier will discuss what’s behind the trend of major asset donations to non-501(c)(3) charities; types of tax-exempt/philanthropic vehicles (501(c)(3), 501(c)(4), 501(c)(6), taxable nonprofit corporation, philanthropic LLC); major differences in governance, tax treatment, and regulatory oversight and restrictions; and planning opportunities in light of those differences.
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In-Person and Virtual Conference April 29, 2023
American Bar Association Business Law Section's Virtual Spring Meeting - Session: "Creative Philanthropy: Impact (ESG) Investing, Donor Advised Funds, Program Related Investments and More"
“Creative Philanthropy: Impact (ESG) Investing, Donor Advised Funds, Program
Related Investments and More”10:00 a.m. – 11:30 a.m. PT | Room 302 – Beckler, Level 3
In this program, we will explain and explore the latest trends in philanthropy impact investing, including: use of donor-advised funds; program and mission-related investments; and ESG (environmental, social, and governance) investing, among others. We will discuss the ways in which these vehicles and methods are being used, including: supporting diversity and other change efforts in media; social justice movements; climate change efforts, and more. We will focus as well on how to maximize efforts in these areas, both from the charity and the business sides, as well as issues of which to be aware, including private benefit and inurement.
Co-Presenters:
- J.J. Harwayne Leitner, Frankfurt Kurnit Klein & Selz PC
- Jinna Kwak, Adler & Colvin
- Matt Topham, K&L Gates
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In-Person Conference January 19, 2023
The University of Texas School of Law’s 40th Annual Nonprofit Organizations Institute Conference - Session: "A View of the Sector"
Explore the latest in policy and regulation from the US Government in an effort to answer the question: What just happened? You’ll be the first to know about topics like donor-advised fund regulations, end-of-year legislation, and what is Congress likely to do next? What about those expiring incentives for charitable giving, will they be renewed? Meanwhile, the Supreme Court continues to unwind the regulatory powers of the executive branch.
8:30 a.m. – 9:30 a.m. CT
Co-Presenter: Alex Reid, Baker & Hostetler LLP
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In-Person Conference October 27, 2022
National Network of Fiscal Sponsors - Session: Riskspotting: Catching (and Resolving) the Red Flags With New Projects
Thu 10/27 || 1:30 – 2:45 pm ( 75 minutes) || Breakout Sessions Block 1
Riskspotting: Catching (and Resolving) the Red Flags With New Projects: Karl Mill and Ehsan Ali, Mill Law Center; Jinna Kwak, Adler & Colvin
If you have any questions about breakout sessions or anything else about the event, please email fiscalsponsors (at) gmail.com.
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Presentation May 1, 2018
Center for Volunteer and Nonprofit Leadership, Emerging Leaders Program: “Nonprofit Legal Compliance”
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Seminar March 27, 2018
Grant Thornton, LLP - “What’s New in Not-for-Profit Law?”
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Webinar March 6, 2018
Continuing Education of the Bar (CEB): "Representing Charitable Nonprofits: Helping Nonprofits Engage with Confidence in Ongoing Operations"
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