|
|
Thursday March 28, 2024Private Letter RulingCharitable Contribution Qualifies as Unusual Grant
GiftLaw Note:
Charity is a public charity and was named as a beneficiary of Trust. Charity has received partial distributions from Trust and expects to receive additional disbursements annually for a specified number of years. The funds from Trust will be used by Charity for the study, analysis and management of specified subjects. The grantors of Trust are a third party who have not previously supported Charity. The grantors are a disinterested party, do not directly or indirectly exercise control over Charity and do not have any connection to Charity, any organizations related to Charity or any organizations that govern Charity. Charity's receipt of this distribution would adversely affect its public charity status. To qualify as a public charity, an organization must pass the one-third public support test. If an organization fails this test, it must operate as a private foundation. A large contribution can threaten a charity's public status. However, a donation can be disregarded for the purposes of the public support test if it qualifies as an unusual grant by meeting the requirements of Reg. 1.170A-9(f)(6)(ii) and Reg. 1.509(a)-3(c)(4). In Reg. 1.170A-9(f)(6)(ii), a contribution can be excluded from the public support test if it is (1) attracted by reason of the publicly supported nature of the organization, (2) is unusual or unexpected in size and (3) would, by reason of its size, adversely affect the organization's publicly supported status. Regulation 1.509(a)-3(c)(4) lists additional factors to consider when determining whether a contribution is an "unusual grant," with no single factor as necessarily determinative. Many of these factors relate to the donor's relationship to the organization, the type of contribution made and the amount of public support that the charity has historically solicited and received. Here, the Service determined that the grant is from a disinterested party who met the requirements of Reg 1.170A-9(f)(6)(ii) and Reg. 1.509(a)-3(c)(4). Thus, the charitable contribution qualifies as an unusual grant and will not impact Charity's public status.
PLR 202235013 Charitable Contribution Qualifies as Unusual Grant
9/2/2022 (6/13/2022) Dear Applicant: We have considered your * * * request for recognition of an unusual grant under Treasury Regulation Section 1.170A-9(f)(6)(ii) and related provisions. Based on the information provided, we have concluded that the proposed grant constitutes an unusual grant under Treas. Reg. Section 1.170A-9(Q(6)(ii) and related provisions of the regulations. The basis for our conclusion is set forth below. FactsYou have been named as a beneficiary of B trust, in which you first received c dollars of disbursements in year D of the estimated e dollar s expected. You will receive approximately c dollars annually over approximately a * * *-year period. The money will be used for: 1) The study, analysis, and management of * * *, mechanical, and organic, and/or 2) The study, analysis, and management of * * *, and/or 3) The study, analysis, and/or management of the interaction between * * * and * * *. The grantors of trust B, F, do not exercise control over you, or within, you. You have no prior relationship with F. None of your officers or directors have any relationship with F. This is your first interaction with B and F, and this is your first contribution from B. LawTwo sections of the Treasury Regulations set forth the criteria for an unusual grant. They are: Treasury Regulation Section 1.170A-9(f)(6)(ii)This section states that, for purposes of applying the 2% limitation to determine whether the 33 1/3% of-support test is satisfied or the 10% support limitation is met, one or more contributions may be excluded from both the numerator and the denominator of the applicable percent-of-support fraction. The exclusion is generally intended to apply to substantial contributions or bequests from disinterested parties which:
Treasury Regulation Section 1.509(a)-3(c)(4)This section states that all pertinent facts and circumstances will be taken into consideration to determine whether a particular contribution may be excluded. No single factor will necessarily be determinative. Such factors may include:
Application of LawThe grant meets the requirements of Treasury Regulations section 1.170A-9(f)(6)(ii) because the grant is from a disinterested party, and:
Sincerely, Stephen A. Martin Director, Exempt Organizations Rulings and Agreements Published September 9, 2022
Previous ArticlesFoundation's Set-Aside Approved Trust Retains GSTT Exempt Status Organization's Scholarships Are Not Taxable |