Foundation for Abington School District (F ASD) Abington School - - PowerPoint PPT Presentation

Foundation for Abington School District (F ASD)

Abington School District Meeting of the Board of School Directors April 24, 2018

IRC SE CTION 509(A) SUPPORTING ORGANIZATIONS

The Basics…

Supporting Organizations

• A supporting organization under IRC Section 509(a) is an
• rganization that carries out its exempt purposes by

supporting other exempt organizations, usually other public charities or governmental entities. This classification is important because it is one way a charity can avoid classification as a private foundation, a tax- exempt status that is subject to a more restrictive regulatory regime.

• Because the FASD will be receiving most, if not all, of its

funding from a single source, it will not qualify as publicly supported under the Internal Revenue Code.

To Qualify as a Supporting Organization

FOUR TE STS Must be Satisfied…

• All supporting organizations under IRC Section

509(a) must pass an (1) organizational test, (2) an

• perational test, (3) a control test and (4) a

relationship test. Supporting organizations are classified as Type I, Type II or Type III supporting

• rganizations based on how they satisfy the

relationship test.

Organizational Test

• A supporting organization must be organized exclusively for

the benefit of, to perform the functions of, or to carry out the purposes of one or more specified charitable, educational, religious or publicly supported organizations.

• The organization’s articles of incorporation must state the

specified publicly supported organization on whose behalf the supporting organization is to be operated.

• To satisfy the organizational test, the Articles of Incorporation
• f the FASD will be amended and restated to eliminate any

doubt that its assets may only be used to support the Abington School District.

Operational Test

• A supporting organization must engage solely in activities

that support or benefit its supported organization.

• To satisfy the operational test, the Articles of

Incorporation of the FASD will be amended and restated to assure that its assets may only be used to support the Abington School District.

Control Test

• The supporting organization must be under the “control” of its

supported organization. Control means the practical ability to require the organization to perform any act which significantly affects its operations, or to prevent any such act.

• To satisfy the control test, the FASD’s Bylaws will be amended

and restated to make certain that the FASD’s Board of Directors will be under the control of the Board of School Directors of the Abington School District.

• The FASD’s amended and restated Bylaws provide that the

leadership of the School Board and the School District’s chief administrators and legal counsel will be ex officio members of the FASD’s Board of Directors, thereby ensuring that the FASD stays under the control of the Abington School District.

Relationship Test

• A supporting organization is classified as a Type I, Type

II or Type III supporting organization based on the type

• f relationship it has with its supported organization.
• A Type I supporting organization must be operated,

supervised or controlled by its supported organization, typically by giving the supported organization the power to regularly appoint or elect a majority of the directors of the supporting organization.

• The relationship between the supported organization and

the supporting organization is sometimes described as similar to a parent-subsidiary relationship.

Relationship Test – cont.

• To satisfy the relationship test, the FASD’s Bylaws will be

amended and restated to give the Abington School District (i.e., the supported organization) the power to appoint the FASD’s Board of Directors (i.e., the supporting organization).

• The FASD’s amended and restated Bylaws provide that the

President and Vice President of the School Board and the Superintendent will have the sole authority (by majority vote) to appoint the FASD’s Board of Directors, thereby ensuring that the Abington School District (the supported organization) holds the power to appoint the majority of the directors of the FASD (its supporting organization).

Transparency

• All records, such as annual federal tax reports, annual

reports, and audited financial statements will be posted to ASD’s website or otherwise made available to the public upon request.

• The Corporation shall operate in accordance with the

requirements of the Pennsylvania Sunshine Act, and the Pennsylvania Right-To-Know Law

No Compensation of Directors/ Officers

• Only reimbursement of reasonable expenses.

Clarifications

• Bylaws are revised to make distinction clear

between FASD and District