December 7, 2017
In order to retain its status as a public charity, an organization will need to meet either the 33 1/3% public support test or the 10% facts and circumstances test. The intent of this test is to demonstrate that the organization is truly supported by the general public and not a small interest group. This test is calculated and reported on Form 990, Schedule A, Part II Section A. Public Support.
Since the intent is to prove general public support, as part of this test, total contributions from each individual, trust, corporation or other non-publicly supported organization in excess of 2% of total support for the testing period (current and four preceding years) must be deducted from total support to arrive at public support.
However, if the organization gets an unusual grant or contribution, the unusual contribution can be retained in the calculation. Unusual grants are generally substantial grants and bequests from disinterested persons and are large enough to endanger the organization's ability to pass the public support test. Such grants or bequests are excluded from the total gifts, grants and contributions of a given year and are not included in the calculation of the excess of 2% total support.
All pertinent facts and circumstances will be taken into consideration in determining if a particular contribution may be excluded as an unusual grant. Among the factors to be considered are:
Schedule A, Part VI will include a list showing the amount, but not the grantor, of each unusual grant actually received or accrued each year. A record should be maintained showing the name of the contributor, the date and amount of the grant, and a brief description of the grant.