Private Letter Ruling

PLR 202235013 Charitable Contribution Qualifies as Unusual Grant

9/2/2022 (6/13/2022)

Dear Applicant:

We have considered your * * * request for recognition of an unusual grant under Treasury Regulation Section 1.170A-9(f)(6)(ii) and related provisions.

Based on the information provided, we have concluded that the proposed grant constitutes an unusual grant under Treas. Reg. Section 1.170A-9(Q(6)(ii) and related provisions of the regulations. The basis for our conclusion is set forth below.

Facts

You have been named as a beneficiary of B trust, in which you first received c dollars of disbursements in year D of the estimated e dollar s expected. You will receive approximately c dollars annually over approximately a * * *-year period. The money will be used for: 1) The study, analysis, and management of * * *, mechanical, and organic, and/or 2) The study, analysis, and management of * * *, and/or 3) The study, analysis, and/or management of the interaction between * * * and * * *.

The grantors of trust B, F, do not exercise control over you, or within, you. You have no prior relationship with F. None of your officers or directors have any relationship with F. This is your first interaction with B and F, and this is your first contribution from B.

Law

Two sections of the Treasury Regulations set forth the criteria for an unusual grant. They are:

Treasury Regulation Section 1.170A-9(f)(6)(ii)

This section states that, for purposes of applying the 2% limitation to determine whether the 33 1/3% of-support test is satisfied or the 10% support limitation is met, one or more contributions may be excluded from both the numerator and the denominator of the applicable percent-of-support fraction. The exclusion is generally intended to apply to substantial contributions or bequests from disinterested parties which:

• are attracted by reason of the publicly supported nature of the organization;
• are unusual or unexpected with respect to the amount thereof; and
• would, by reason of their size, adversely affect the status of the organization as normally being publicly supported.

Treasury Regulation Section 1.509(a)-3(c)(4)

This section states that all pertinent facts and circumstances will be taken into consideration to determine whether a particular contribution may be excluded. No single factor will necessarily be determinative. Such factors may include:

• Whether the contribution was made by a person who;
  a. created the organization;
  b. previously contributed a substantial part of its support or endowment;
  c. stood in a position of authority with respect to the organization, such as a foundation manager within the meaning of Internal Revenue Code (IRC) Section 4946(b);
  d. directly or indirectly exercised control over the organization, or; e. was in a relationship described in Internal Revenue Code section 4946(a)(1)(C) through 4946(a)(1)(G) with someone listed in bullets a, b, c, or d above.
  e. was in a relationship described in IRC Section 4946(a)(1)(C) through 4946(a)(1)(G) with someone listed in bullets a, b, c, or d above.
  A contribution made by a person described in bullets a through e is ordinarily given less favorable consideration than a contribution made by others not described above.
• Whether the contribution was a bequest or an inter vivos transfer. A bequest will ordinarily be given more favorable consideration than an inter vivos transfer.
• Whether the contribution was in the form of cash, readily marketable securities, or assets which further the exempt purposes of the organization, such as a gift of a painting to a museum.
• Whether (except in the case of a new organization) prior to the receipt of the particular contribution, the organization (a) has earned on an actual program of public solicitation and exempt activities and (b) has been able to attract a significant amount of public support.
• Whether the organization may reasonably be expected to attract a significant amount of public support after the particular contribution. Continued reliance on unusual grants to fund an organization's current operating expenses (as opposed to providing new endowment funds) may be evidence that the organization cannot reasonably be expected to attract future public support.
• Whether, prior to the year in which the particular contribution was received, the organization met the one-third support test described in Treas. Reg. Section 1.509(a)-3(a)(2) without the benefit of any exclusions of unusual grants pursuant to Treas. Reg. Section 1.509-3(c)(3);
• Whether the organization has a representative governing body as described in in Treas. Reg. Section 1.509(a)-3(d)(3)(i); and
• Whether material restrictions or conditions within the meaning of Treas. Reg. Section 1,507-2(a)(7) have been imposed by the transferor upon the transferee in connection with such transfer.

Application of Law

The grant meets the requirements of Treasury Regulations section 1.170A-9(f)(6)(ii) because the grant is from a disinterested party, and:

• The grant was attracted by reason of your publicly supported nature
• The grant is unusual or unexpected with respect to the amount
• The grant will adversely affect your status as normally being publicly supported

We'll make this determination letter available for public inspection after deleting personally identifiable information, as required by IRC Section 6110. We've enclosed Letter 437, Notice of Intention to Disclose, and a copy of the letter that shows our proposed deletions.

• If you disagree with our proposed deletions, follow the instructions in the Letter 437 on how to notify us.
• If you agree with our deletions, you don't need to take any further action.

If you have questions, please contact the person listed at the top of this letter.

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements