Compliance Tips for Type III Supporting Organizations | Planned Giving Design Center

Compliance Tips for Type III Supporting Organizations | Planned Giving Design Center: The so-called “Type III supporting organization” (“SO”),[1] which first came into existence as a result of the enactment of Section 509(a)(3) under the Tax Reform Act of 1969,[2] is one of the most complex and difficult to understand forms of Section 501(c)(3) tax-exempt organizations. Although it may often bear a striking resemblance to a private foundation, particularly in the case of a charitable trust whose sole purpose it to make payments to one or more publicly supported organizations,[3] a Type III SO is classified as a public charity and is therefore not subject to the strict and burdensome tax regime, chock-full of potential excise tax penalties, applicable to private foundations.[4] Over the years, both Congress and the IRS have struggled with the treatment of Type III SOs, particularly in light of their perceived abuses, from considering eliminating them altogether t