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Private Operating Foundation - Support Test

A private foundation will meet the support test if:

  1. At least 85 percent of its support (other than gross investment income) is normally received from the general public and 5 or more unrelated exempt organizations,
  2. Not more than 25 percent of its support (other than gross investment income) is normally received from any one exempt organiza­tion, and
  3. Not more than 50 percent of its support is normally received from gross investment income.

Here the term support means gifts, grants, contributions, membership fees, the value of services or facilities furnished by a governmen­tal unit without charge, net income from unre­lated business activities, and gross receipts from admissions, sales of merchandise, per­formance of services, or providing facilities in any activity that if not an unrelated trade or business.

The support received from any one exempt organization may be counted toward satisfying the 85 percent support test only if the foundation re­ceives support from at least five exempt organi­zations.

For example, a foundation that normally re­ceives 20 percent of its support (other than gross in­vestment income) from each of five unrelated exempt organizations will meet the support test even though it receives no support from the general public.  However, if a foundation nor­mally receives 50 percent of its support (other than gross investment income) from three founda­tions and the balance of the support comes from sources other than exempt organizations, the foundation will not meet the 85 percent test.

Support from the general public includes support received from an individual, trust, corpo­ration, or governmental unit to the extent, that the total amount received from anyone individ­ual, trust, or corporation does not exceed 1 percent of the foundation’s total support (other than gross investment income) for the period.  In applying the 1 percent limit, all support received from any donor and any person related to the donor is treated as received from one person.  Support received from a governmental unit is not subject to the 1 percent limit.


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Page Last Reviewed or Updated: 30-Apr-2013