A supporting organization is a favorable alternative to a private foundation. Supporting organizations are permanent endowments, which ensure a lasting legacy of community impact. A supporting organization maintains its own identity as a separate charitable corporation. Its unique relationship with the Community Foundation qualifies the supporting organization for treatment as a 501(c)(3) public charity by the IRS, allowing the donor’s charitable contributions to qualify for more advantageous tax treatment.

Benefits of a Supporting Organization

• An Active Role for the Donor: Donors, family members or representatives may maintain active participation in managing a supporting organization. Roles can be customized based on the donor’s interests.
• Professional Staff Support and Management: The Community Foundation can provide ongoing professional administration of the supporting organization, including staffing, creating the governance structure, grantmaking strategy, communications and marketing, and preparing and filing IRS-mandated tax returns.
• Public Charity Tax Status: A supporting organization enjoys the favorable tax benefits of public charity status, which is unavailable to private foundations, maximizing the impact of a donor’s philanthropy.
• Advantageous Tax Deductions: Cash contributions by individuals to a supporting organization are fully deductible up to 60% of adjusted gross income. Gifts of long-term, appreciated assets are deductible up to 30% of adjusted gross income (versus 30% and 20% for similar gifts to a private foundation).
• Favorable Treatment for Gifts of Non-Cash Assets: Gifts of non-cash assets, such as private business interests or qualified intellectual property, are deducted at fair market value (versus cost basis if the gift was made to a private foundation).
• No Annual Payout Requirement: Unlike private foundations, a supporting organization is not required to have the mandatory 5% payout.
• No Excise Taxes: Supporting organizations can avoid certain excise taxes, which apply to private foundations. This includes taxes on net investment income, excess business holdings, and transactions between the organization and its substantial contributors.
• Endowment Investment Options: A supporting organization may retain discretion and flexibility in investment management, investment allocation, and spending policy with the support from and within the general guidelines of the Community Foundation for Southeast Michigan.