The Law of Tax-Exempt Healthcare Organizations, 3rd Edition

CHAPTER FOURTEEN

Development Foundations

• § 14.1 Basic Concepts
  • (f) Public Charity Status

§ 14.1 BASIC CONCEPTS

(f) Public Charity Status

p. 326. Insert as fourth complete paragraph:

With the change in 2006 in the federal tax statutory law pertaining to supporting organizations and the resulting proposed regulations,^24.1 healthcare entities and other existing and potential supported organizations need to be concerned about the type of supporting organization used in the development context. Normally, these development foundations are controlled entities,^24.2 so use of the supporting organization in this regard would cause the supporting organization to be in the Type I category.^24.3 If, however, the Type III category of supporting organization^24.4 should be considered, it is essential that the entity be structured and operated as a functionally related Type III supporting organization, because fundraising and making grants to a supported organization may not be appropriate activities for a non–functionally integrated Type III supporting organization.^24.5

24.1. See § 5.5(e), note 225.

24.2. See § 14.1(d).

24.3. See § 5.5(d)(i).

24.4. See § 5.5(d)(iii).

24.5. See § 5.5(g), text accompanied by note 244.3.