Supporting Organization FAQs
What is a supporting organization?
Generally stated, a supporting organization is a 501(c)(3) that qualifies as a public charity because it provides meaningful support (financial, programmatic or both) to another public charity, and yields some degree of structural and operational control to that charity. Based on the relationship of the supporting organization to the public charity it supports, a supporting organization will be classified as a Type I, II or III.
What is a Type III supporting organization?
A Type III supporting organization operates with a greater degree of independence from the organization it supports than Type I or Type II supporting organizations. Typically the supported organization appoints one member of a Type III supporting organization's board and institutes other procedures to ensure that the supporting organization is responsive to it.
When is a Type III supporting organization "functionally integrated"?
A Type III supporting organization is considered to be functionally integrated if it performs the functions of, or carries out the purposes of, the supported organization and, but for the supporting organization, the supported organization would normally engage in these activities directly. For example, a Type III supporting organization that operates a printing press for a university would be considered functionally integrated because without the supporting organization the university would carry out the activity itself.
How do I determine whether a Type III organization is functionally integrated?
Only a careful review of the facts and circumstances of a particular organization will allow you to conclude if a Type III organization is functionally integrated. As a practical matter, only the potential grantee is in a good position to make such a determination. Until there are regulations or other guidance from the IRS to clarify what is acceptable due diligence, the Council on Foundations advises private foundations to consult with legal counsel to determine what procedures to following in awarding grants to Type III supporting organizations.
How can I tell if a grantee is a supporting organization?
Right now the easiest way to identify a supporting organization is to look in a charity's IRS determination letter for a mention that it is "an organization described in Section 509(a)(3)," which is the section of the IRS code covering supporting organizations, or to look at Part IV of Schedule A of the charity's Form 990, where supporting organizations are required to check box 13 to indicate the basis of their public charity status.
How can you tell a supporting organization's type (I, II or III)?
Form 990 for the 2005 tax year now requires a supporting organization to indicate its type in Part IV of Schedule A.
Source: Council on Foundations
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