Dec 1, 2009 12:00 PM

The proposed regulations for Type III supporting organizations could have been worse. Still, one new requirement may be disastrous

By Gerald B. Treacy, Jr.

Few Type III supporting organizations (SOs) are likely to be overjoyed by the new proposed regulations that could soon be governing them. Yet, these anxiously awaited proposed regs¹ are significantly better than we might have expected, given some recent, alarming statements made by the Internal Revenue Service.²

Still, one new payout requirement — that Type IIIs distribute at least 5 percent of the value of their non-exempt-use assets annually — may prove to be a substantial burden, particularly in a market that makes earning a 5 percent rate of return unlikely. Indeed, this requirement alone could drive Type IIIs to convert to Type I or II status, or to terminate altogether. That would be a significant loss. In an era when fundraising and making ends meet is increasingly impossible, public charities are depending more heavily on the support of Type III SOs. Meanwhile, individuals and families are depending more heavily on these public charities — and they would be the ultimate losers.

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

Poll

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

Click here to download the 2011 Trust Glossary

50 Years Ago This Month

Click here to read the issue.

50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

Click here to view the most up to date guide (September 2011)

Press Releases