Supporting organization (charity)
A supporting organization, in the United States, is a public charity that operates under the U.S. Internal Revenue Code in 26 USCA 509(a)(3). A supporting organization either makes grants to, or performs the operations of, a public charity similar to a private foundation. However, unlike donations to a private foundation, donations to a supporting organization garner the same higher deduction rate as donations to public charities. However, supporting organizations allow less control over the organization to the founders than private foundations. The Internal Revenue Code calls a public charity that relies on a supporting organization a "supported organization". History The Tax Reform Act of 1969 created private foundations and imposed greater restrictions on this classification, including excise taxes and lower donor deductions for contributions. This Act created supporting organizations as an exception to private foundations—because they are organized, operated, and controlled in the public interest. Supporting organizations are not subject to the problems and abuses found in foundations that led to the creation and associated restrictions on private foundations. Reform Past impact and criticism Mostly large and medium-sized donors created supporting organizations in order to retain some control over their donated assets. Type III supporting organizations comprised the sort of