Charitable Trusts and Treasury Regulations

Mark Powell (Adjunct Professor of Law, Chapman University School of Law) recently published his article entitled Proposed Guidance Under Treasury Regulation Section 1.509(A)-4, SSRN, working paper series, April 1, 2010.

The abstract available on SSRN is below:

Current Treasury Regulations provide that a supporting organization must maintain one of three types of relationships with its supported organization in order to maintain public charity status. A supporting organization that is operated in connection with one or more supported organizations is known as a Type III supporting organization. An organization qualifies as a Type III supporting organization if it fulfills a “responsiveness” test and an “integral” part test. For charitable trusts, an alternative “responsiveness” test currently exists, but Proposed Regulation under the Pension Protection Act eliminates this alternative test. This paper recommends that the Treasury modify the Proposed Regulation by adopting a rebuttable presumption for charitable trusts that wish to be classified as Type III supporting organizations.