What are the tests to qualify as a publicly supported organization in Schedule A?
16 views | Last modified 4/10/2024 9:20:23 AM EST |

Organizations that receive a substantial portion of support in the form of contributions from the general public or the governmental units are called as publicly supported organizations. A common example of this organization is a human service organization whose revenue is generated from various public and federal fundraising campaigns.
 
However, if an organization need to be classified as a publicly supported organization, then the organization is required to take any one of the two Public Support Tests described under Sections 509(a)(1) and 170(b)(1)(A)(vi), and (2)Section 509(a)(2).
 
These tests are conducted on an annual basis to examine the support received by the organization during the current tax year and the four prior tax years. To maintain public charity status, the organization must pass this public support test each year while filing Schedule A along with Form 990.
 
Public Support Test under Sections 509(a)(1) and 170(b)(1)(A)(vi)
 
For qualifying as a publicly supported organization under Section 509(a)(1) and 70(b)(1)(A)(vi), the organization must have
33 1/3 % or more of its total support must come from governmental agencies, contributions from the general public, and contributions or grants from other public charities; or
10 % or more of its total support must come from governmental agencies, contributions from the general public, and contributions or grants from other public charities, and the facts and circumstances indicate it is a publicly supported organization.

Public Support Test under Sections 509(a)(2)
 
The test under Section 509(a)(2) requires that an organization, during every five years receives, on an aggregate basis, more than 33 1/3% of its support from public support. This test is conducted on an annual basis to examine the support received by the organization during the current tax year and the four prior tax years. To maintain public charity status, the organization must pass this public support test every year.
 
The support generally includes contributions, grants, and membership dues received by the organization, as well as fees received from the general public related to activities undertaken by the organization in furtherance of its tax-exempt purpose, including admissions, sales of merchandise, the performance of services, and/or furnishing of facilities.