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| Re: 509a3 supporting agency
Posted by carl   on 3/23/2009, 11:01 pm, in reply to "509a3 supporting agency"
VIP Poster
Hi,
If I understand your premise, your organization is a 509(a)(3) operating in support of a 501(c)(3). If that's correct, then private foundations will not fund your projects because you are not considered a public charity. Your classification under 509 simply means that your organization is not a private foundation. While many foundations will fund organizations that are not 501(c)(3), foundations are legally bound to not fund organizations that are not publicly operated charities. Your organization falls into the latter category. So in your specific case, private foundations and governmental agencies are not allowed to make donations directly to your organization. Very often, however, your organization may house funds donated to a 501(c)(3). A university endowment, a fundraising arm of a religious organization (funds are given to the church, but your organization actually holds the money or philanthropic trusts,) and certain organizations that support large hospitals all fall into this scenario.
Private foundations, especially family foundations, will fund other charities that are not classified as 501(c)(3): municipalities, churches are classified as 509(a)(1), and nongovernmental organizations of other countries are also classified as 509(a) organizations, but I did not read very far into those.
There is an interesting article written by Virginia Richardson & John Francis Reilly and published by the IRS Exempt Organizations Technical Instruction Program 2003 that you might want to read. Titled, "Public Charity or Private Foundation Status Issues under IRC 509(a)(1)-(4), 4942(j)(3), and 507," this pamphlet goes into the intricacies of classifications.
The short answer to your question is, "foundations won't fund you because you do not operate as a public charity."
Hope this helps,
Carl
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