A supporting organization is a specific type of public charity that carries out its exempt purpose by supporting other exempt organizations, usually other public charities.

The key feature of a supporting organization is a strong relationship with an organization it supports. The strong relationship enables the supported organization to oversee the operations of the supporting organization. Therefore, the supporting organization is classified as a public charity, even though it may be funded by a small number of persons in a manner similar to a private foundation.

Why does this classification matter?

The classification is important because it is one way that a charity can avoid being classified as a private foundation, a status that is subject to a much more restrictive regulatory regime.

All 501(c)(3) organizations are considered private foundations unless they qualify as public charities. It can be to a nonprofit’s advantage to be a public charity, as private foundations are more closely scrutinized, regulated, and taxed than public charities. The thinking that underpins this regulatory framework is that the donating public will “discipline” public charities far more efficiently than government oversight can.

To qualify as a public charity, an organization must pass what is called the “public support test.” While most public charities qualify for this designation by receiving direct support from the public, supporting organizations qualify as public charities because they support either another public charity or the charitable activities of a 501(c)(4), (5), or (6) organization. (The supported organization is the one that receives the support.)

What are the Requirements and Types of Supporting Organizations?

All S.O.s must pass an organizational test, an operational test, a control test and a relationship test. S.O.s are classified as Type I, Type II or Type III S.O. based on how they satisfy the relationship test.

1. Organizational test for Supporting Organizations.

An S.O. must be organized exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more specified 501(c) organizations. The S.O. must set out who it supports in its state formation documents, among other corporate formation requirements.

2. Operational test.

The S.O. must engage solely in activities that support or benefit its supported organization.

3. Control test.

There are specific IRS rules about who can control an S.O. There are requirements about disqualified parties.

4. Relationship test.

An S.O. is either Type I, Type II or Type III based on the type of relationship it has with its supported organization(s).

  • Type I–an S.O. that is under direct control of the supported organization. The relationship between the supported organization(s) and the S.O. is sometimes described as similar to a parent-subsidiary relationship.
  • Type II– an S.O. that is under common control with the supported organization. The relationship between the supported organization(s) and the S.O. is sometimes described as similar to a brother-sister relationship.
  • Type III– an S.O. that is not necessarily related to the supported organization(s). A Type III S.O. must be operated in connection with one or more publicly supported organizations.
    • The Type III S.O. must also pass separate responsiveness and integral part tests, which we do not address here.

How Do You Know if a Charity Is a Supporting Organization?

Contact the organization or the IRS to determine if it is a supporting organization. The charity’s letter of determination, which is a public document, will note that it is not a private foundation because it is a section 509(a)(3) organization – a Supporting Organization.

You will need to further inquire with the charity or the IRS to determine if the nonprofit is a Type I, Type II, or Type III supporting organization.


IRS SO Types

For more information on the differences between public charities and private foundations, see Nonprofit Law Basics: What is the Difference Between a Public Charity and a Private Foundation?