What is a failed public charity and how can they be identified? (FAQ)

Failed public charities are organizations classified as private foundations, the default category for 501(c)(3)

organizations, because they failed as public charities to meet the public support test (and they could not qualify

as public charities under any of the other exemptions for hospitals, etc.)

Foundation code of �suspense� (09?) � Prior to implementing the advanced ruling policy (see below), the IRS would

mark some public charities as having a �suspense� foundation code to indicate that they had not met the public

support test.

The IRS now issues an advance ruling for 5 years that enables an organization that applies for public charity

status but that cannot currently qualify to do so at the end of the period.

If advanced ruling date on BMF, then public charity�s public support test must be met at the end of the period or

the organization will be reclassified as a private foundation by the IRS.

How can failed public charities be identified on the BMF?

If organizations had public charity status at one point but have private foundation status at a later date.

Public charities that fail to file at the end of the five year advance ruling period are automatically classified

as private foundations even though Ron suspects that most of them are �dead.� Thus, one indicator of �failed

public charity status� is to see if an organization is marked as a private foundation in the BMF but has failed to

file a 990-PF. (Tax period would be more than a year or two old.)

- Phone conversation between Ron Williams (Exempt Organizations, IRS), Linda Lampkin & Tom Pollak

The attached table shows the distribution of failed public charities that do file IRS Form 990-

PFs. Note that the number of failed public charities/private foundations in the IRS Business Master File will be

higher since, as Ron Williams pointed out, these organizations are probably defunct and do not file their returns.



Added 06/17/2003 by tpollak, Modified 04/07/2010 by asblackwood


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