When a donor's mission or goals are consistent with the broad charitable purposes of The Minneapolis Foundation but there is a desire to retain a separate board, control of grants or control of investments. It is generally used when a donor wishes to commit $5 million or more as a charitable endowment to benefit the community.

A Supporting Organization is similar to a private foundation in structure, except that it must satisfy certain organizational and operational tests set forth in the IRS Code. In essence, in order to confer the benefits of taxation as a public charity, the organizational test defines and limits the purpose of the supporting organization to insure that it is subservient to the mission of The Minneapolis Foundation. The supporting organization may initiate its own programs and grantmaking, as long as these benefit the same charitable class served by the beneficiary organization.

The Supporting Organization must apply to the IRS for approval as a Supporting Organization. The regulations relating to Supporting Organizations are complex and competent legal advice is essential.

What are the advantages?

Most donors seeking to organize and consolidate their charitable giving find that a Donor Advised Fund at The Minneapolis Foundation provides a simple, efficient and tax-wise solution. The Foundation has nearly 600 Donor Advised Funds, ranging from $10,000 to over $35 million. Signature Funds offer special advantages for funds over $1,000,000.

But, for those who are planning to commit $5 million or more as a charitable endowment to benefit the community, a supporting organization of The Minneapolis Foundation can be an attractive alternative.

• The donor's appointees (including family members) may participate fully as trustees of the Supporting Organization.
• The Minneapolis Foundation will handle accounting, tax preparation, correspondence, etc. And the Supporting Organization's trustees will have access to the technical and grantmaking expertise of the Foundation's seasoned program and administrative staff.
• The Supporting Organization can invest its assets separately from those of the Foundation. It may accept and hold gifts of appreciated stock in its portfolio, including closely-held stock and other illiquid assets.
• The excise taxes that private foundations must pay do not apply to Supporting Organizations, and they are not subject to the minimum payout requirements and other restrictive rules that apply to private foundations.

With passage of the Pension Protection Act of 2006, Congress asked the Internal Revenue Service to review the administration of Supporting Organizations. New regulations and restrictions have been imposed, and the community foundation field is in the process of evaluating this new environment. The Minneapolis Foundation will evaluate proposed supporting organization relationships on a case-by-case basis.