Under IRS 501 (c)(3), an organization is tax-exempt as long as it meets the requirements set forth in IRC 509(a)(2).
The "One-Third Limit On Gross Investment Income and Unrelated Business Income" test set out in IRC 509(a)(2) states that "An organization will meet this test only if it normally receives not more than one-third of its total support in each taxable year from gross investment income"
If a non-profit received $29 million dollars in donations last year, and earned another $26 million on investments from an endowment fund, has it violated the terms of the "One Third Limit"?
Tro, I'm afraid I'm not very good with the definitions. I do know that the principal began with money from donations and that more money is added from current donations and interest on the fund each year.
The non-profit claims that the fund was created to accumulate funds against the day when fund raising postage costs become prohibitive.
Orignal From: A 501 (c)(3) non-profit org compliance question?
Post a Comment