Section of Taxation Publications
  VOL. 56
NO. 4
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 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
The Difficulties of Establishing a Supporting Organization When Making Charitable Contributions to a Donor-Advised Fund Program: Lapham Foundation Inc. v. Commissioner
Joel Ugolini


In Lapham Foundation Inc. v. Commissioner, the Tax Court held that a foundation making charitable grants to a donor-advised fund program was not a private foundation because it failed to meet the criteria for a supporting organization delineated in section 509(a)(3)(B). The court determined that the tax-payer-foundation did not satisfy several of the key tests that are essential to characterization as a supporting organization. This holding resulted in the taxpayer’s loss of benefits that being a supporting organization would have conferred. The case illustrates how complicated various regulations have made it for a supporting organization to prove that it is operated in connection with a publicly supported organization. In particular, supporting organizations seeking to make modest donations to donor-advised funds with considerable resources will have compliance difficulties due to the structure of the regulatory tests. The result is that some taxpayers who deserve supporting organization status according to Congressional intent are instead being categorized as private foundations.

Part I of this Note lays out the basic concepts and facts of the case. Part II presents the Tax Court’s holding. Part III analyzes the decision, and Part IV discusses some of the basic problems in establishing a supporting organization, while asserting that various regulations conflict with Congressional intent.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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