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GiftLaw Pro Home   >  Chapter 7 - Charitable Organizations  >  7.1 Public Charities  >  7.1.6 Supporting Organizations  >  Basic Quiz

Basic Quiz - 7.1.6 Supporting Organizations

1. Supporting organizations (SOs) are classified as private foundations.
           
2. Type I and Type II SOs must pass the organizational, operational, control and relationship tests. Type III SOs have separate tests and do not need to pass the organizational, operational, control and relationship tests.
           
3. A Type I SO has a parent/subsidiary relationship with the organization(s) it supports as the supported organization exercises a substantial degree of direction and control over the policies, programs and activities of the SO.
           
4. One way to establish a Type II SO is to show that the SO's officers, directors or trustees overlap with those of the supported charity.
           
5. A Type III SO has the closest relationship with the charity it supports.
           
6. For the purposes of the Control Test, as a general rule, control will be found where disqualified persons have either 50% of the voting power or a veto power over the SO’s activities.
           
7. If a Type III SO fails to show that it is functionally integrated, then it may not be considered a Type III SO.
           
8. Functionally integrated Type III SOs do not have to satisfy the responsiveness test.
           
9. If an SO makes a distribution to a substantial contributor where the contributor receives more than an incidental benefit, then the SO could face an excise tax for the entire amount of the transfer under the excess benefit rules.
           
10. Private foundations can make distributions to SOs, but distributions from private foundations to Type III non-functionally integrated SOs are not qualifying distributions for purposes of satisfying a private foundation's required annual distributions under section 4942.