a private foundation.387
IRS regulations define an integrated auxiliary of a church as a tax-exempt organization the principal activity of which is exclusively religious and which is controlled by or associated with a church or a convention or association of churches.388 Under these regulations, integrated auxiliaries of a church include men's and women's fellowship associations, mission societies, theological seminaries, and religious youth organizations. Schools of a general academic or vocational nature, hospitals, orphanages, homes for the elderly, and the like are not considered by these regulations to be integrated auxiliaries of churches, even though they have a religious environment or promote the teachings of a church.
Although some courts have upheld this approach by the IRS,389 others have differed.390
Educational Institutions. An “educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on” is a public charitable organization and thus is not a private foundation.391 This type of organization must have as its primary function the presentation of formal instruction.392
It is pursuant to these rules that institutions such as primary, secondary, preparatory, and high schools and colleges and universities derive public charitable organization status. These institutions also encompass federal, state, and other public schools that qualify under these rules, although their tax-exempt and public charitable organization status may be derived from their categorization as governmental agencies or instrumentalities.393 An organization cannot achieve public charitable organization status as an operating educational institution, however, when it is engaged in both educational and noneducational activities (for example, a museum operating a school), unless the noneducational activities are merely incidental to the educational activities; it must primarily be a formal educational institution.394
Thus, to avoid private foundation status as an educational institution, the organization must be more than an organization that generally engages in educational activities.395
Health Care Institutions. A hospital is a public charitable organization and thus is not a private foundation.396
A hospital is defined, for federal tax purposes, as an “organization the principal purpose or functions of which are the providing of medical or hospital care or medical education or medical research.”397 A hospital must promote the health of a class of persons broad enough to benefit the community and must be operated to serve a public rather than a private interest.398 The term hospital includes federal hospitals, as well as state, county, and municipal hospitals that are instrumentalities of those governmental units; it also includes rehabilitation facilities, outpatient clinics, extended care facilities, community mental health and drug treatment centers, and cooperative hospital service organizations. The term does not, however, include convalescent homes, homes for children or the elderly, or institutions the principal purpose or function of which is to train handicapped individuals to pursue a vocation,399 nor does it include free clinics for animals.400
For these purposes, the term medical care includes the treatment of any physical or mental disability or condition, whether on an inpatient or outpatient basis, provided the cost of the treatment is deductible401 by the individual treated.402
Thus, to avoid private foundation status as a hospital, the organization must be more than an organization that generally engages in activities that promote health.403
Medical Research Organizations. A medical research organization is a public charitable organization and thus is not a private foundation.404 It is an organization “directly engaged in the continuous active conduct of medical research in conjunction with a hospital.”405 The organization need not be formally affiliated with a hospital to be considered primarily engaged in the active conduct of medical research in conjunction with a hospital. There must, however, be a joint effort on the part of the research organization and one or more hospitals pursuant to an understanding that the organizations will maintain continuing close cooperation in the active conduct of medical research.406
The term medical research means the conduct of investigations, experiments, and studies to discover, develop, or verify knowledge relating to the causes, diagnosis, treatment, prevention, or control of physical or mental diseases and impairments of human beings. To qualify, the organization must have the appropriate equipment and professional personnel necessary to carry out its principal function.407 Medical research encompasses the associated disciplines spanning the biological, social, and behavioral sciences.408
Agricultural Research Organizations. An agricultural research organization is an entity that is engaged in the continuous active conduct of agricultural research (as defined in the Agricultural Research, Extension, and Teaching Policy Act of 1977) in conjunction with a land-grant college or university or a non-land-grant college of agriculture. For a contribution to an agricultural research organization to qualify for the 50 percent limitation,409 during the calendar year in which a contribution is made to the organization, the organization must be committed to spend the contribution for the research before January 1 of the fifth calendar year that begins after the date of the contribution.410
Supporting Foundations. Certain supporting foundations are public charitable organizations and thus are not private foundations. These organizations are foundations that provide support for colleges and universities that are administered by governments.411
The organization must normally receive a substantial part of its support (exclusive of income received in the exercise or performance of its tax-exempt activities) from the United States or from direct or indirect contributions from the general public. It must be organized and operated exclusively to receive, hold, invest, and administer property and to make expenditures to or for the benefit of a college or university (including a land-grant college or university), which itself is a public charitable organization
