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Support Organizations
Support organizations—often called supporting organizations in the nonprofit sector—are a specific type of tax-exempt public charity that exist primarily to support one or more other exempt organizations, usually public charities.
Key Characteristics:
- Purpose: Their sole mission is to support and benefit specified public charities or exempt organizations.
- Relationship: They maintain a close, formal relationship with the organizations they support, often through overlapping boards or formal agreements, allowing the supported charity to supervise or oversee their activities.
- Tax Status: They are classified as public charities under Section 509(a)(3) of the Internal Revenue Code, which provides favorable tax treatment compared to private foundations.
- Public Charity Classification: This status helps them avoid the more restrictive regulatory regime applied to private foundations, as they are subject to oversight by the supported organizations and, indirectly, the public.
Types of Supporting Organizations:
The IRS recognizes three types based on the degree of control and relationship with the supported charity:
| Type | Description |
|---|---|
| Type I | Operated, supervised, or controlled by the supported public charity; closest relationship. |
| Type II | Supervised or controlled in connection with the supported charity, often via overlapping boards. |
| Type III | Operated in connection with the supported charity but more independent; subject to stricter rules, especially if non-functionally integrated. |
Type III organizations may be further classified as functionally integrated or non-functionally integrated, affecting regulatory requirements.
Why Support Organizations Matter:
- They provide flexibility and tailored giving opportunities for donors.
- They enable donors to make significant gifts while maintaining involvement in how funds are used or invested.
- They help bridge private philanthropy and public charities, enhancing charitable impact.
In summary, support organizations are public charities designed to support other exempt organizations through a close, supervised relationship, offering tax advantages and operational flexibility within the nonprofit ecosystem.