Disaster Relief: Large Corporate Donations May Affect Public Charity's Public Support Test


Will a large donation made by an employer to an employer-sponsored public charity to provide funds for disaster relief programs cause the charity to fail its public support test and become a private foundation?

A large donation made by the sponsoring employer may cause an employer-sponsored public charity that normally satisfies the one-third public support test to fail that test. The organization may still satisfy the facts and circumstances test to remain a public charity and avoid private foundation status, however. To satisfy the facts and circumstances test, the organization must receive at least 10 percent of its support from donations from public sources and operate in a manner designed to attract donations from the general public, community, or membership group.  In addition, the public support test is based on aggregate support data over five years. For more information about the facts and circumstances test, see Publication 557, Tax-Exempt Status for Your OrganizationPDF.