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What Is a 509(a)(3) Supporting Organization?

A 509(a)(3) supporting organization is a unique entity in the nonprofit space.  It is a sub-category of 501(c)(3), and it is considered a public charity in-and-of itself.  What is substantially different about a supporting organization, however, is the fact that it cannot exist on its own. Rather, it is subordinate to another 501(c)(3) public charity.  As the name suggests, its only purpose is to support the parent organization.


But, it’s not enough to simply support a charity.  Private foundations support charities, but they are not considered supporting organizations.  To qualify as a 509(a)(3), the IRS says it “must have a relationship with its supported organization sufficient to ensure that the supported organization is effectively supervising or paying particular attention to the operations of the supporting organization.”

Did you get all that?  A simpler way of saying it is that the supporting organization must effectively be controlled by the supported organization, as well be organized for its exclusive benefit.

All supporting organizations must pass an organizational test, an operational test, a control test and a relationship test.

Organizational Test

A supporting organization must be organized exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more specified 509(a)(1) or 509(a)(2) organizations (public charities).

The organization’s articles must state the specified publicly supported organization(s) on whose behalf the supporting organization is to be operated. The articles of a Type I or II supporting organization (see Relationship Test below) may designate its supported organization(s) by class or purpose. The articles of a Type III supporting organization may not.

Subject to certain requirements, a Type I or II supporting organization may support an organization not organized in the United States. A Type III supporting organization may not.

The organization’s articles must not expressly empower the organization to engage in activities not in furtherance of these purposes or to operate to support or benefit any organization other than its specified supported organization(s).

Operational Test

A supporting organization must engage solely in activities that support or benefit its supported organization(s). In addition to making direct grants to its supported organization(s), a supporting organization generally may make grants or provide services or facilities to:

  • individual members of the charitable class benefited by its supported organization(s),
  • another supporting organization that supports the same supported organization(s) or
  • a state college or university described in Internal Revenue Code section 511(a)(2)(B) (colleges or universities which are government instrumentalities).

However, any such grants or provision of services or facilities must support or benefit the supported organization(s), not just the direct recipients.

Control Test

Disqualified persons may not control a supporting organization, whether directly or indirectly. For this purpose–

  • Foundation managers who are disqualified persons only as a result of being foundation managers, and not for other reasons, are not treated as disqualified persons for purposes of this control test; and
  • Control means the practical ability to require the organization to perform any act which significantly affects its operations, or to prevent any such act.
Relationship Test

To make matters a bit more complicated, 509(a)(3) organizations come in 3 types, conveniently labeled Type I, Type II, and Type III.  These 3 types of supporting organizations define what the IRS calls the Relationship Test.  Let’s take a look at what makes these different from one another.

Type I.  A Type I supporting organization must be operated, supervised or controlled by its supported organization(s), typically by giving the supported organization(s) the power to regularly appoint or elect a majority of the directors or trustees of the supporting organization. The relationship between the supported organization(s) and the supporting organization is sometimes described as similar to a parent-subsidiary relationship.

Type II.  A Type II supporting organization must be supervised or controlled in connection with its supported organization(s), typically by having a majority of the directors or trustees of the supported organization(s) serve as a majority of the trustees or directors of the supporting organization. The relationship between the supported organization(s) and the supporting organization is sometimes described as similar to a brother-sister relationship.

Type III.  A Type III supporting organization must be operated in connection with one or more publicly supported organizations. All supporting organizations must be responsive to the needs and demands of, and must constitute an integral part of or maintain significant involvement in, their supported organizations. Type I and Type II supporting organizations are deemed to accomplish these responsiveness and integral part requirements by virtue of their control relationships. However, a Type III supporting organization is not subject to the same level of control by its supported organization(s). Therefore, in addition to a notification requirement, Type III supporting organizations must pass separate responsiveness and integral part tests.

Notification Requirement.  A Type III supporting organization must provide the following documents annually to each of its supported organizations:

      1. A written notice describing the type and amount of support provided by the supporting organization to the supported organization during the tax year preceding the year the notice is provided;
      2. A copy of the supporting organization’s Form 990 or 990-EZ that was most recently filed as of the date the notification is provided; and
      3. A copy of the supporting organization’s governing documents, as most recently amended, to the extent not previously provided.

This information must be postmarked or electronically transmitted by the last day of the fifth month following the close of the tax year to which the information pertains.

Responsiveness Test.  A Type III supporting organization must be responsive to the needs or demands of a supported organization. An organization meets this test with regard to a particular supported organization if:

      1. The supported organization is adequately represented in the governing body of the supporting organization because:
        • The supported organization may appoint at least one officer, director, or trustee of the supporting organization.
        • At least one member of the governing body of the supported organization also serves as an officer, director, or trustee of a supporting organization, or
        • The officers, directors, or trustees of the supporting organization and of the supported organization maintain a close and continuous working relationship; and
      2. Because of this relationship, the supported organization has a significant voice in how the supporting organization manages and uses its assets.

Integral Part Test.  A Type III supporting organization may be functionally integrated (FISO) or non-functionally integrated (non-FISO) depending on the manner in which it meets the integral part test. Type III FISOs are subject to fewer restrictions and requirements than non-FISOs. In particular, distributions from private foundations to Type III non-FISOs are not qualifying distributions for purposes of satisfying a private foundation’s required annual distributions under Section 4942, and may be taxable expenditures under Section 4945. In addition, Type III non-FISOs are subject to excess business holding rules under Section 4943 and must meet annual payout requirements.

The Integral Part Test includes a lengthy definition of FISO and non-FISO, which can be read on the IRS website for more detail.  We will omit that here.

Wrapping Up

Additional requirements include the restriction on gifts to Type I and Type III supporting organizations from persons who control the governing body of a supported organization (or from certain related individuals or entities), and that supporting organizations are subject to the general requirements applicable to all public charities.

In full disclosure, most of the content of this article is verbatim from the Internal Revenue Service.  For an explainer article like this one, it made more sense to simply quote the IRS than to attempt to rewrite the material, just for the sake of originality.  In our next installment, we will explore, in our own words, several use cases of putting a 509(a)(3) to work for your charitable organization.

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

This Post Has 4 Comments

  1. Our foundation, which is a 501(c)(3) Type I supporting organization, sometimes receives checks from donors that say “Retirement Distribution Check – Gross Distribution – QCD from __[donor’s name]__. I don’t believe this type of organization qualifies so I usually return the check and suggest they make the distribution to the operating company, which is a regular 501(c)(3) charity. Is that correct and if so, is there some way to avoid this issue?

    1. A Type I supporting org should be able to accept virtually any contribution that a operating public charity can. The 509a3 is still considered a 501c3 charitable nonprofit, so retirement fund distributions should be OK. There are restrictions involving “who” is giving to the Type 1, but usually not “what”.

    1. One of the best places to learn about compliance issues is right here on our website. We have over 100 pages of content that will keep you learning for a while. Make sure you subscribe to our newsletter and YouTube channel. As far as sponsor growth, I encourage you to visit our friends at Get Fully Funded. They’re the best at helping small organizations grow their donor base.

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