Hello and thank you for your question.
I have written my answer in two parts.
----------
Part 1: Establishing the not-for-profit entity.
As your question implies, your for-profit corporation can lawfully
organize a not-for-profit entity under the laws of New Jersey,
Colorado, Florida, Texas or for that matter any US state you choose.
New Jersey:
TITLE 15A CORPORATIONS AND ASSOCIATIONS NOT FOR PROFIT
http://www.njleg.state.nj.us/cgi-bin/om_isapi.dll?clientID=478400&Depth=2&depth=2&expandheadings=on&headingswithhits=on&hitsperheading=on&infobase=statutes.nfo&record={4B42}&softpage=Document42
In New Jersey, the not for profit corporation cannot issue shares, so
technically it will not be owned by your company, but your company
will choose its officers and directors.
http://www.njleg.state.nj.us/cgi-bin/om_isapi.dll?clientID=478400&Depth=2&depth=2&expandheadings=on&headingswithhits=on&hitsperheading=on&infobase=statutes.nfo&record={4B54}&softpage=Document42
Since all non-profit entities, no matter what state you use, are not
permitted to pay dividends or otherwise inure benefits on their owners
and operators, this is a distinction without a difference.
Texas (here you can issue shares or not, as you please):
TEXAS NON-PROFIT CORPORATION ACT
http://www.capitol.state.tx.us/cgi-bin/cqcgi?CQ_SESSION_KEY=YOBXCAVLWDHX&CQ_QUERY_HANDLE=125712&CQ_CUR_DOCUMENT=1&CQ_TLO_DOC_TEXT=YES
Colorado
http://64.78.178.12/cgi-dos/statdspp.exe?W&srch=%27%27+AND+%27corporation%27+AND+%27nonprofit%27&i=0&cat=FFFFFFFFFFF800&r=10&s=20425&cr=10
Florida
http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=Ch0617/titl0617.htm&StatuteYear=2002&Title=%2D%3E2002%2D%3EChapter%20617
----------
Part 2: Protecting the new entity's Section 501(c)(3) tax exemption
The essence of your question is whether business transactions between
the new entity and your company will violate the provisions of the
Internal Revenue Code. The most important of these are those that
prohibit excess benefit transactions, that is, penalties that the
Internal Revenue Service imposes when individuals associated with a
tax-exempt organization receive compensation or benefits that exceed
the value of services, goods, or donations they have provided the
organization.
GuideStar
http://www.guidestar.org/news/features/int_sancs.stm
Please read the above citation carefully, and also the two articles
that it links to:
"Steven T. Miller, director of Exempt Organizations at the IRS, has
written an analysis of the intermediate sanction regulations. It is
available on the IRS Web site at
http://www.irs.gov/pub/irs-utl/m4958art.pdf
"A thorough discussion about intermediate sanctions, including
examples of what is and is not an excess benefit transaction and who
is and is not considered a disqualified person, precedes the temporary
regulations in the Federal Register. The discussion and the
regulations are available on the U.S. Government Printing Office Web
site at
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=2001_register&docid=fr10ja01-31.pdf
(The document may take a few minutes to load.)
Much of this material addresses the compensation levels that tax
exempt entities are permitted to pay, but the same argument applies to
the value of goods and services that the tax exempt entity purchases
from your company.
The underlying issue is the prohibition on "inurement" which is the
legalistic term that applies to a charity that would benefit your
company (in this case) in a manner that would be inconsistent with its
charitable purpose.
PRIVATE BENEFIT AND INUREMENT
http://sago.tamu.edu/soba/TaxManual/Prvinur.html
501(c)(3) Do's and Don'ts
http://members.aol.com/irsform1023/status/dodont.html
IDENTIFYING ABUSIVE TRANSACTIONS INVOLVING SECTION 501(c)(3) ...
http://www.irs.gov/pub/irs-utl/part2c02.pdf
Excess Benefit Transactions for 501(c)(3) and 501(c)(4) Tax ...
http://www.t-tlaw.com/lr-09.shtml
So based on the above, the answer to your question is that your
company will be able to engage in business with the tax exempt entity,
but only on terms and at prices that it can defend as being proper in
relation to the goods and services that it provides.
Again, please read the material cited above, bearing in mind the sort
of intercompany tranactions that you are contemplating. Of course,
this answer does not constitute legal advice that you can rely on, but
it should provide you with the answer you seek.
Search terms used:
"State Corporate Statutes"
"501(c)(3)" sanctions
inurement "501(c)(3)
Sincerely,
richard-ga |
Request for Answer Clarification by
asking-ga
on
09 Sep 2002 19:27 PDT
Thanks, richard-ga for your answer - it was laid out very clearly, and
it's a good start. I appreciate the time you've put into it.
The establishing your non-profit section was somewhat helpful.
Although it wasn't the real focus of my question, I did find, in one
of the links, an instance of the sort of thing I *was* looking for
(but unfortunately, you hadn't actually pointed out to me - I just
came across it as a navigated the site.) See "Macaluso" below.
I understand that a for-profit company can set up a non-profit - as
anyone can, really. The links in the section "establishing a
not-for-profit entity" were, unfortunately, relatively general in that
regard. They were just the general non-profit corporation codes.
They don't really address my question. What I need to understand are
limitations that are placed *later* on operating procedures. For
instance, anyone can be the incorporator, and install the first board
members. Can they continue to control who sits on the board of the
non-profit indefinitely?
As I said in the question:
"I need as much information as possible on any specific legal
limitations placed on a non profit corporation being controlled by a
for-profit corporation, especially when it also then interacts with
that corporation. "
I'm looking for things like the following, which can actually be found
by digging into the Colorado link you provided (but you didn't tell me
about this limitation): Macaluso v. Jenkins, (95 Ill. App. 3d 461,
420 N.E.2d 251) "Whereby a the president of a nonprofit corporation
was found to have so commingled its funds and assets with his own and
those of a business [for-profit] corporation he controlled and have
treated them as his own for his benefit that the corporate veil must
be pierced to promote justice. He was found liable for a debt
contracted in the name of the nonprofit corporation."
It is precisely *that* sort of reference I'm looking for.
General statutes concerning overall non-profit law that don't
specifically mention any particular limitations are easy to find - and
are not really a $150 question. I asked for "What I'd ideally like to
see is a list of
the laws (both state and federal) that have some impact on the
interaction of for-profits and not-for-profits, and quotes from the
legislation, indicating the specific limitations, if any."
The key here is "impact on the interaction, and ...quotes from the
legislation, indicating the specific limitations, if any..."
Maybe another example would help - I'm looking for things like the
recent Redlands case (US Tax Court) for more info see:
http://www.bbl.com/newsletters/non_profitpartnerC.asp
It's a case where a non-profit simply lacking full control over a
joint venture with a for-profit meant that the venture could not be
deemed a non-profit. That venture would have been at least partially
controlled by a non-profit, yet it lost its status. Why, then, would
a venture that was wholly controlled by a for-profit not be in the
same danger? It is those sorts of findings I'm looking for.
You said: "So based on the above, the answer to your question is that
your
company will be able to engage in business with the tax exempt entity,
but only on terms and at prices that it can defend as being proper in
relation to the goods and services that it provides." Unfortunately,
I don't believe, based on the things I have been able to find, that
things are quite as simple as that. Private benefit, for example, can
come *despite* the terms and prices being "fair" - the control over a
transaction (not just the details thereof) can sometimes indicate that
the *purpose* of the transaction was private benefit, not the "exempt
purpose". It was an elaboration on the complications and limitations
that I was after.
Finally, on the state law section, I was hoping for a little more than
4 states - I had asked "I am interested in all states, and would like
to have as many state references as possible, but I'm especially
interested in NJ, CO, FL
and TX (TX and NJ being the most important)." $150 is a relatively
decent sized question - I expected to see a little more than just
single links to general legislation in the four states I specifically
mentioned, I'm afraid. Again, maybe I was expecting too much.
FYI, the TX link - one of my more important states, no longer works.
The website says that search links expire after a short amount of
time.
"Keyword searches that produce an "Invalid session key" or "Could not
open document" message occur when ten or more minutes elapse between
the original search and an attempt to access a document from search
results. "
If you could please reconstruct how you got to that page, I'd be
grateful.
The IRS 4958 stuff (the intermediate sanctions on excess benefit
transactions) regulations were certainly applicable to a federal
limitation that would apply to the situation I've outlined. This is
certainly a limitation in terms of the interaction between the two
organizations. I can't believe that it is the only limitation,
however, as you've said. I've cited a oouple of other situations
where restrictions were held on the interaction between the two
organizations.
I hope this is making sense - I hope I'm not being too discouraging; I
really do appreciate the time you've put in - but I have information I
really feel I still haven't had much of an answer for, and although I
realize I'm looking for something a bit more difficult than simply the
basic non=profit statutes, I also feel like I'm offering a fairly
decent price. Maybe I wasn't clear enough in my original question,
and maybe I'm asking too much for $150.
Let me know what you think. Thanks -
Asking GA
|
Clarification of Answer by
richard-ga
on
09 Sep 2002 20:57 PDT
Hello again:
Now that I have a clearer idea of your thinking, let's approach your
question again:
State not-for-profit corporation laws.
Fortunately there are at least two web sites that provide links to all
or nearly all of the state's statutes in this area. As noted, these
are not guaranteed to be 100% up-to-date but they provide an adequate
preliminary survey for your purposes prior to your hiring an attorney
to establish the new entity (more about the need for professional
representation below).
http://www.rrdfin.com/edgar/resource_statutes.htm
http://www.nrai.com/html_research/cstatutes.asp
My apologies, however, for providing a non-permanent link for Texas:
you'll need to go to
http://www.capitol.state.tx.us/statutes/statutes.html
select "search" and then search for the phrase, in quotes, "TEXAS
NON-PROFIT CORPORATION ACT" and from the choices that appear, choose
Vernon's Texas Civil Statutes - TITLE 32
As for the remaining 46 states, now that I've pointed you to them, I
don't think it will be practical, nor particularly useful to you, for
me to compile and list here their not-for-profit statutes.
STEPS TO FORMING A NOT-FOR-PROFIT ORGANIZATION
http://www.echoinggreen.org/resource/finance/501(c)(3).htm
Mainly you should understand that this is not an area where there
are significant differences from one state to another, so you will not
benefit from "forum shopping." In each state, there is a
straightforward filing procedure to organize the statute, and the
requirements (sometimes set out by statute and other times by caselaw)
that the corporate officers and directors refrain from negligence,
misconduct and the like. Coincidentally, I previously answered this
very question under Tennessee law:
Legal obligations of trustees
https://answers.google.com/answers/main?cmd=threadview&id=58098
Thus the Macaluso case that you located is typical in holding that
it is improper for a corporate principal to commingle personal and
corporate assets (especially when the corporation is nonprofit). It's
equivalent to embezzlement, which is prohibited in every state. So I
disagree with your assessment that Macaluso is representative of the
sort of reference you're looking for.
The important laws bearing on your question are entirely federal;
namely the Internal Revenue Code provisions that support the 501(c)(3)
exemption. [You misspoke in your question--it's not the private,
for-profit corporation
that is a 501(c)3 organization, the exempt entity is the one that's
under 501(c)(3).]
What I believe does deserve greater focus, and which I would like to
provide further clarification for you, is the ways the proposed
arrangement could jeopardize the not-for-profit's IRS tax exemption.
I only discussed inurement in my answer, because that's the key in the
case of 501(c)(3) public charities.
In fact, I may have assumed too much in thinking that the 501(c)(3)
organization that you contemplate will be a publicly supported charity
under IRC 509(a)(1):
"All charities are exempt from federal income taxation under §
501(c)(3) of the Code and are then classified as public charities or
private foundations pursuant to §509 of the Code. This classification
as a public charity or private foundation is of critical importance to
donors of every kind. §501(c)(3) groups that qualify under §§
509(a)(1), (2) or (3) of the Code are not private foundations.
(Otherwise stated, they are public charities.) 509(a)(1) groups are
divided into namely, schools, churches, and hospitals and those
organizations which normally receive a substantial part of their
support from what is referred to as public support. For the latter
group, public support consists of support from governmental agencies
and community foundations and contributions from the general public."
http://www.306090.org/509a2.htm
Publicly supported charities, i.e. organizations that are not private
foundations, are not subject to the private foundation excise taxes
under Chapter 42 of the Internal Revenue Code.
So here is my conception of a proper $150 answer. Please let me know
more about the charitable organization that you have in mind,
particularly with regard to the degree of public support it expects to
receive. If yours is a publicly supported charity, I'll tell you some
more about inurement. If yours is not a publicly supported charity,
I'll tell you about the Chapter 42 excise taxes, and the conduct that
runs afoul of them. And finally, I hadn't perceived that you
contemplated the two entities entering into a joint venture or
partnership arrangement. If that is what you have in mind, then the
Redlands case is reason enough to drop the idea. Was there something
else about that which you needed to know?
Looking forward to hearing from you.
richard-ga
|
Clarification of Answer by
richard-ga
on
09 Sep 2002 21:42 PDT
I promised to write more about the need for professional
representation, and then I forgot to do so.
As you yourself are a Google Researcher, I hope you and I have a
congruent notion of the service's value in an area like this. It's
not just the disclaimer of legal advice that's at the bottom of this
page: The value of my answer to you should be that it helps you at
the threshold of the venture--deciding whether the concept is worth
pursuing, considering the appropriate structure and most importantly,
choosing an attorney with the proper qualifications. In this case,
you want a tax attorney who regularly represents tax-exempt entities,
one who is familiar with Forms 1023 and 990. He or she may charge you
$5,000 to $10,000 to get your project underway, and in that context I
hope you'll come to agree that I'm giving you your money's worth at
this preliminary juncture.
-R
|
Request for Answer Clarification by
asking-ga
on
11 Sep 2002 07:47 PDT
Thank you for your clarification - unfortunately, it seems to
generally repeat what you said earlier - the links to general
not-for-profit legislation, and the IRS excess benefit/inurement
issues, as well as a general admonishment regarding legal advice and
my expectations of what a $150 answer might contain. (And yes -
you're correct - when composing the question, I moved some things
around in the text, and mistakenly dropped the 501(c)3 clarification
clause in the wrong place - my apologies.)
Perhaps the problem, here, is coming from your clear assumption that I
am looking to construct such an arrangement. I am not. I don't
believe I indicated anything like that.
I am reviewing an existing situation, one in which I know that state
laws differ. The situation I am reviewing came under litigation, in
state court, for just the reason you tell me cannot be - the state law
question of whether or not such an arrangement was allowable in one of
the states I've mentioned. State court - not federal tax court. In
the litigation-related documents I have, some clear statements are
made about the situation being legal in one state, and not in another.
They do not elaborate on *why* - that is what I'm looking for, (and
what I have not yet gotten) in my GA question. The case in question
settled out of court, so I have no final opinion to look to there.
You said: "And finally, I hadn't perceived that you
contemplated the two entities entering into a joint venture or
partnership arrangement. If that is what you have in mind, then the
Redlands case is reason enough to drop the idea."
First, "dropping the idea" is not relevant, as I've explained. Nor
are the references to how much it would cost in legal fees to set up
such a situation. Further, I was clearly looking at an ongoing
situation of interaction - I re-emphasized that in my initial
clarification. Not specifically a joint venture or partnership - the
reason I believe the Redlands case is illustriative is because the
venture was found to be ineligible for non-profit status, due to a
portion of control being held by a for-profit corporation. The fact
that is was a joint venture is *not* the relevant part, - the control
by a for-profit *is*. And, again, that is a *state* court finding -
*not* a federal tax court finding. Clearly, state laws do come into
play in whether or not a non-profit can be controlled by a for-profit.
Further, Macaluso is also relevant to my issue - yes, he was
comingling with personal funds, and that is obviously inappropriate.
However, the relevant portion of the case is the fact that he
comingled non-profit funds with a for-profit corporation *he
controlled*. That piece is the type of issue that's relevant to me.
Here's what I asked for:
"...*specific* legal limitations placed on a non profit corporation
being controlled by a for-profit corporation, especially when it also
then interacts with that corporation. ... ideally a list of the laws
(both state and federal) that have some impact on the interaction of
for-profits and not-for-profits, and quotes from the legislation,
indicating the specific limitations, if any. I am interested in
*all* states, and would like to have as many state
references as possible, but I'm especially interested in NJ, CO, FL
and TX (TX and NJ being the most important)."
The only limitation you've given me is the most fundamental definition
of a non-profit - it can't pay a profit (either directly or disguised
in excess benefits). That's not a $150 answer. As you said yourself
in the original answer - "Since all non-profit entities, no matter
what state you use, are not permitted to pay dividends or otherwise
inure benefits on their owners and operators, this is a distinction
without a difference."
I completely understand that finding these limitations is difficult -
they are found in case law interpretations, I suspect, *not* in the
foundational statutes. That is why I priced the question at a point
that I believed was relatively high.
I was not looking for a link to an unrelated foundation's ("echoing
green"?) generic statements about setting up a 501(c)3, nor do I think
that a link to the general state statutes is worth $150. As you said,
there are a number of sites which point to nearly all of them -
finding those portals is not a major challenge.
The non-profit in question was not a foundation - it was,
specifically, a 501(c)3 of the 509(a)2 type. Chapter 42 does not
apply. I also don't need further IRS references to the inurement
issue - those are easy to find. Private benefit prohibition
(including excess benefit) is one obvious limitation on a non-profit,
although it applies to any disqualified person, and is not specific to
any interaction between for-profit and non-profit entities.
I still need, as I said in my original question - specific legal
limitations that are placed on the situation I describe. If I'm
interpreting your answer correctly, it is basically that there are no
such restrictions at a state level, and the only federal limitations
relate to the basic foundation of a non-profit, that it cannot
distribute profits (either directly or as private benefit.) Since I
have a number of reasons (as cited) to believe that's not correct, I'm
still quite disappointed.
|
Clarification of Answer by
richard-ga
on
17 Sep 2002 06:44 PDT
Hello again:
You state that you are reviewing an existing situation, one that is
currently in litigation in state court.
Will you please confirm the following:
Under which of the Section 509 Internal Revenue Code Sections did this
organization obtain its Section 501(c)(3) tax exemption? What is its
charitable purpose and source of funds?
Has the non-profit organization filed Form 1023? What has been the
response of the IRS to this or any other filing it may have made?
In what US states does the for-profit entity engage in business?
What is the nature of the state court proceeding? Perhaps it is an
action by the state attorney general? A shareholder derivative suit?
Something else?
You imply in your latest request for clarification that you are not
interested in reviewing links to general not-for-profit legislation,
nor do you wish to hear more about the IRS excess benefit/inurement
issues.
Please accept the idea that for me to provide other than "general"
information, I first need to know "specific" facts.
As soon as I hear more from you, I will do my best to clarify my
answer to your satisfaction.
Sincerely,
richard-ga
|
Request for Answer Clarification by
asking-ga
on
18 Sep 2002 10:53 PDT
Thanks for coming back to me with these questions - I'll try to answer
them the best I can.
>>You state that you are reviewing an existing situation, one that is
>>currently in litigation in state court.
The situation is not currently in litigation - as I said in the
clarification request, it came under litigation, but that litigation
settled out of court before a final court ruling. The settlement
included a break-up of the relationship. The non-profit is now
independent and the for-profit has set up another, somewhat similar
arrangement. (Which is why I refer to it as on-going.)
>>Will you please confirm the following:
>>Under which of the Section 509 Internal Revenue Code Sections did
this
>>organization obtain its Section 501(c)(3) tax exemption? What is
its
>>charitable purpose and source of funds?
As outlined in the clarification request, it was a 501(c)3 of the
509(a)2 type. Charitable purpose is providing an educational program,
and source of funds was over the required limit for public support, so
it's not a foundation.
>>Has the non-profit organization filed Form 1023? What has been the
>>response of the IRS to this or any other filing it may have made?
Yes, when it was incorporated, years ago. It was granted 501(c)3
status, under the 509(a)2 section guidelines. The filing did not
outline the control held by the for-profit corp.
>>In what US states does the for-profit entity engage in business?
Nearly all of them. However, both the corporations were headquartered
in NJ, and the vast majority of the revenue for the for-profit entity
came from the interaction between the two organizations, so the vast
majority of the corporate revenue of the for-profit corporation came
in NJ.
>>What is the nature of the state court proceeding? Perhaps it is an
>>action by the state attorney general? A shareholder derivative
suit?
>>Something else?
The litigation was filed in NJ Superior Court, Chancery Division. The
non-profit board of trustees filed suit against the for-profit
corporation. The non-profit trustees felt that the for-profit was
exerting undue influence over the non-profit in forcing the non-profit
to use the for-profit as the sole vendor to supply a major amount of
input to the non-profit's product line. The NJ state attorney general
reportedly became interested in the case, but was surprised
(unpleasantly) to discover that the situation was "legal in NJ",
although it apparantly would not have been elsewhere. It's the basis
for that finding that I'm seeking.
>>You imply in your latest request for clarification that you are not
>>interested in reviewing links to general not-for-profit legislation,
>>nor do you wish to hear more about the IRS excess benefit/inurement
>>issues.
This is right - thanks. I'm looking for why it would be legal in one
state, and not in another, as the NJ attorney general was reported to
have discovered at the time. Other limitations are also of interest
to me: "Other general references to this particular issue in
non-profit management would also be useful, (for instance, if certain
organizations that support non-profits had restrictions on such
arrangements) but the specific legislation citations are the most
important." Thanks.
>>As soon as I hear more from you, I will do my best to clarify my
>>answer to your satisfaction.
Thanks very much! I realize this is a difficult question - I
appreciate your willingness to keep trying to find the answers for me.
|
Clarification of Answer by
richard-ga
on
25 Sep 2002 12:29 PDT
Hello again asking-ga
I'm sorry it took me this long to get back to you--I called the
Council on Foundations with your question, and it took a while to find
someone there to talk to.
Council on Foundations
1828 L Street, NW
Washington, DC 20036
202/466-6512
"Since 1949, the Council on Foundations has helped foundation staff,
trustees and board members .... Through one-to-one technical
assistance, research, publications, conferences and workshops, legal
services, and a wide array of other services, the Council addresses
the important issues and challenges that face foundations and
corporate funders."
http://www.cof.org/
Here in paraphrase is what Andrew Schultz of the Legal Department of
the Council on Foundations told me:
"The arrangement where a profit-making corporation organizes a
non-profit entity is referred to as a corporate foundation. This is
permitted in all 50 states, and corporate foundations are common
enough that you can assume that they exist in all 50 states. In a
literal sense no-one owns a non-profit entity, so the question is not
whether a profit-making corporation can own a non-profit, but rather
whether it can exercise control over one. And all 50 states allow
that. Although state law governs the legal existence of the
non-profit entity, that's just a matter of making the proper filing
with the Secretary of State, etc. In some states that can be done
on-line, in other states there are particular forms that must be
filled out. But the state law formalities are only 2% of what matters
in organizing a corporate foundation. 98% of the important work is a
matter of federal tax law--questions of 501(c)(3) qualification,
inurement, and so on. When people ask what state they should organize
their corporate foundation in, we tell them that they should use the
state where they run their business."
So based on the above and my own understanding of the issue, The New
Jersey attorney general was doubly wrong in thinking it was not legal
for a for-profit entity to organize and control a non-profit entity.
Not only is it legal in New Jersey, it is legal in all 50 states.
Again, thank you for your patience while I completed this answer.
Sincerely,
richard-ga
|
Request for Answer Clarification by
asking-ga
on
26 Sep 2002 19:14 PDT
Richard -
Thanks for contacting the Council on Foundations. It seems rather
unlikely that a state attorney general would be so wrong about a
matter of the law.
What the council on foundations told you was interesting, although,
unfortunately, not relevant to my question. As I've said earlier,
this was *not* a foundation, but a public charity (a critical
distinction, as you yourself had pointed out in an earlier
clarification.) Foundations are liable for taxes that public
charities are not, and operate under quite different latitudes in
terms of their operations.
I truly appreciate the time you've put into answering the question - I
guess we've pretty much exhausted where we're going, though. Thanks
for all the effort.
I guess
|
Clarification of Answer by
richard-ga
on
26 Sep 2002 20:51 PDT
Dear asking-ga
You posted the following question:
"Can a private, for-profit corporation set up and control a non-profit
corporation?"
The answer to your question is "Yes."
And the result is the same regardless of where the not-for-profit
entity receives its financial support.
There is no law in any of the 50 states that prohibits a for-profit
entity from establishing a not-for-profit entity. Nor is there a
state law that allows a for-profit entity to establish only private
foundations to the exclusion of publicly supported charities.
I have no idea why you think that the Internal Revenue Code Section
509 definition of public charity versus private foundation makes any
difference to your question.
It does not.
Sincerely,
richard-ga
|
Request for Answer Clarification by
asking-ga
on
27 Sep 2002 05:12 PDT
Thanks -
Sorry, but my clarification request of yesterday was somehow cut off
mid-sentence. (After the "I guess...")
It's interesting that you would say "I have no idea why you think that
the Internal Revenue Code Section 509 definition of public charity
versus private foundation makes any difference to your question."
You, yourself, brought that difference into the answer, more than
once, both in explaining that it matters, and later, in requesting
further details about which section of the code the non-profit status
was granted. Simply asserting, however strongly, that the distinction
now doesn't matter, does not make that so.
As you, yourself brought up, It's a critical difference - here's why -
foundations are *not* required to maintain a level of "public"
support, as charities are - so obviously, foundations can be (and are,
almost by definition) supported and controlled by private entities
(often for-profits.) That is the fundamental difference between the
two types of non-profit, as I expected you understood, when asking for
clarification on this exact issue. The foundations support
organization you cite even refers to itself as providing support for
"foundations and corporate funders".
The simple idea that a state attorney general would be "doubly wrong"
about the laws, even those in their own state, certainly remains an
enormous red flag. A statement from someone at a "foundations and
corporate funders" support organization is interesting, in that
perhaps had the organization in my question been organized as a
foundation, then it would have been completely legal, although that is
does not answer the question about the organization I'm asking about.
Basically, as I said, I think it's clear that although we've both
tried, here - and I appreciate the effort you've put in, I think we're
going in circles.
(Here is the continuation of the sentence which was cut off from my
earlier clarification) - 'I guess that we need to call it a day,
here.'
Thanks for trying -
Asking-ga
|
Clarification of Answer by
richard-ga
on
27 Sep 2002 06:43 PDT
As you know, every time you post a Request for Clarification, I get an
email from Google Answers instructing me to reply to it.
Please do not reply to this message.
richard-ga
|
