A philanthropist is a person who donates time, money, experience, skills, or talent to help create a better world. A donor is a person who donates money or goods to a charity. It can also refer to a person who donates blood or a part of their body to help someone who is sick or injured. Private foundations provide grants to other tax-exempt organizations to carry out their charitable purposes.
A fund managed by a community foundation in which the donor has specified that the fund's income or assets be used for the benefit of one or more specific public charities. A fund maintained by a community foundation that is used for a specific charitable purpose, such as health education or research. While a support organization can be formed to benefit any type of public charity, the use of this form is particularly common in relation to community foundations. Public charities (see Public Charity) can exert pressure as long as lobbying does not become a substantial part of their activities.
When a private foundation awards a grant to an organization that is not classified by the IRS as tax-exempt under Section 501 (c) (and as a public charity under Section 509 (a), the law requires ensuring that the funds are spent for charitable purposes and not for obtaining private benefits or political activities. To be a support organization, a charity must comply with one of three complex legal tests that guarantee, at a minimum, that the organization receiving the support has some influence over the actions of the supporting organization. Additional taxes may also apply to managers of the organization, such as the charity's board of directors, who knowingly approve an excessive profit transaction. When used on its own, it usually refers to a person who donates money to a charity or political party.
Unlike private foundations, public charities are not prohibited from making financial transactions with disqualified individuals as long as the transaction is fair to the charity. Such a donation or grant results in a tip or the conversion of a public charity to a private foundation. A sponsor can also be a person who donates money to someone participating in an event to raise money for charitable purposes. A fund with these characteristics may be exempt from the classification of donor-advised funds if it donates to a single public charity or government unit or if the fund meets certain requirements applicable to scholarship funds.
In its traditional legal meaning, the word charity encompasses religion, education, assistance to the government, the promotion of health, the alleviation of poverty or distress, and other purposes that benefit the community. To be automatically classified as a public charity based on this test, organizations must demonstrate that they normally receive at least one-third of their support from the general public (including government agencies and foundations). The second test, sometimes referred to as the section 509 (a) () test, applies to charities, such as symphony orchestras or theater groups, that derive a substantial portion of their revenue from selling services that promote their mission, such as selling tickets for performances.