## Facts

- Polm Family Foundation, Inc. was organized as a Maryland non-stock corporation with stated purposes to conduct and support activities benefiting organizations pursuing public health and/or Christian objectives.
- The Foundation applied to the IRS for recognition as a tax-exempt organization under 26 U.S.C. § 501(c)(3) and classification as a supporting organization (public charity) under 26 U.S.C. § 509(a)(3).
- Over roughly a year, the Foundation exchanged correspondence with the IRS and amended its articles/bylaws and adjusted its board composition in response to IRS concerns.
- The IRS did not issue a final determination within the statutory period; the Foundation sued in federal district court for declaratory relief under 26 U.S.C. § 7428.
- The IRS did not contest the Foundation’s § 501(c)(3) eligibility; the dispute concerned only whether it qualified as a § 509(a)(3) supporting organization rather than a private foundation.
- The district court entered judgment that the Foundation did not qualify under § 509(a)(3) and was therefore a private foundation; the Foundation appealed that classification ruling.

## Issues

1. Whether the Foundation’s governing documents and relationship to potential beneficiaries satisfied 26 U.S.C. § 509(a)(3) and implementing regulations requiring a supporting organization to be organized and operated exclusively for the benefit of identifiable publicly supported organizations capable of oversight.

## Decision

- The D.C. Circuit affirmed the district court’s judgment.
- The court held the Foundation did not qualify as a § 509(a)(3) supporting organization and therefore was classified as a private foundation.
- The court reasoned that the Foundation’s broadly stated purposes made it difficult, if not impossible, to determine whether it would be overseen by a readily identifiable class of publicly supported organizations, as § 509(a)(3) contemplates.
- The court noted the Foundation’s § 501(c)(3) status was not in dispute; only its public-charity classification was rejected.

## Legal Principles

- Organizations described in § 501(c)(3) are treated as private foundations unless they fit within an exclusion in § 509(a), including § 509(a)(3) supporting organizations.
- A § 509(a)(3) supporting organization must be organized and operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more publicly supported organizations, within a structure that permits those organizations to exercise oversight or a significant voice.
- Governing documents that define potential supported organizations so broadly that an identifiable group of publicly supported organizations cannot be determined will not satisfy § 509(a)(3)’s accountability concept.
- When the supported-organizations class is not readily identifiable, the regulatory relationship requirements (including responsiveness and related operational tests) cannot be meaningfully satisfied.

## Conclusion

The court upheld treating the Foundation as a § 501(c)(3) tax-exempt entity but not a § 509(a)(3) supporting organization, because its broad organizational purposes failed to establish an identifiable set of supported public charities able to provide the oversight required for public-charity classification.


Polm Family Found., Inc. v. United States, 644 F.3d 406 (D.C. Cir. 2011)