A large building-plus-cash bequest counts as an "unusual grant," so it will not cost a public charity its publicly supported status

Plain-English summary

A charity that is tax exempt under Section 501(c)(3) and classified as a publicly supported organization under Section 509(a)(2) asked the IRS to treat a large incoming gift as an "unusual grant." The gift was a bequest from an unrelated donor: a building plus cash to cover deferred maintenance. A gift that big, measured against the charity's normal small donations, could distort its public-support math and push it out of public-charity status. The IRS agreed the gift qualifies as an unusual grant under Treasury Regulation Section 1.170A-9(f)(6)(ii). That means the charity can exclude the gift from both parts of its public-support fraction, so accepting it will not jeopardize its publicly supported classification. The determination turned on the donor being disinterested (no control, no prior substantial support, no family or authority relationship) and on the gift furthering the charity's exempt work.

Ruling snapshot

• Question: Does a large bequest of real property and cash from an unrelated donor qualify as an "unusual grant" that can be excluded from the organization's public-support test?
• Outcome: Approved (grant treated as an unusual grant)
• Key authorities: Treas. Reg. § 1.170A-9(f)(6)(ii); Treas. Reg. § 1.509(a)-3(c)(4); IRC §§ 501(c)(3), 509(a)(2), 4946

Full text (IRS public release)

                                                                                Date:
         Department of the Treasury
         Internal Revenue Service                                                07/29/2025
                                                                                Employer ID number:
         Tax Exempt and Government Entities
                                                                                Person to contact:
                                                                                 Name:
                                                                                 ID number:
                                                                                 Telephone:
Release Number: 202550047
Release Date: 12/12/2025




LEGEND                                                                          UIL: 509.02-01
B = Name
x dollars = Dollars
y dollars = Dollars
z dollars = Dollars

Dear           :
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 concluded that the proposed grant constitutes an unusual grant under
Treas. Reg. Section 1.170A-9(f)(6)(ii) and related provisions of the regulations. The basis for our conclusion
is discussed below.
Facts:
You are tax exempt under Internal Revenue Code (IRC) Section 501(c)(3). You are currently classified as a
public charity described in IRC Section 509(a)(2). You were selected to receive the bequest from B because of
your publicly supported nature; specifically, you provide education and cultural awareness of
through their stories, performances and artwork. You host numerous educational and cultural events annually
that are free and open to the public.

The grant came from an outside donor who learned about your mission and wanted to benefit your cause. There
is no prior connection between you and B. B has never provided funds that would constitute any significant
portion of your annual public support. B also does not directly or indirectly exercise control over you, nor are they
in a relationship described in IRC Section 4946(a)(1)(C) through 4946(a)(1)(G).

The grant consists of a building, worth x dollars and a cash donation of y dollars to pay for deferred
maintenance. You plan to use the real property as your headquarters, to hold events, and to allow other public
charities to use the space for free or below fair market value. You are expecting the property donation will
elevate your visibility and public profile. Upon the receipt of the grant from B, your status as a publicly
supported organization may be jeopardized.

You have never received a grant of this size or value, nor any amount even close to it. The majority of your
donors make contributions of less than z dollars. You are expecting substantial growth in the coming years.

                                                                                            Letter 4787 (Rev. 11-2021)
                                                                                            Catalog Number 58230Y
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 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 carried 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:
                                                                                         Letter 4787 (Rev. 11-2021)
                                                                                         Catalog Number 58230Y
Based on the information provided, the proposed grant meets the requirements of Treas. Reg. Section 1.170A-
9(f)(6)(ii) because the grant is from a disinterested party, and:
  • The grant was attracted by reason of the publicly supported nature of your organization.
  • Is unusual or unexpected with respect to the amount.
  • The grant would by reason of their size adversely affect your organization as normally being publicly
    supported.
The grant meets the requirements of Treas. Reg. Section 1.509(a)-3(c)(4) based on the following facts and
circumstances:
  • The grant is not being made by a person who created you.
  • B has not previously contributed a substantial part or endowment to you and has not stood in a position of
    authority such as a foundation manager within the meaning of IRC Section 4946(b).
  • B does not directly or indirectly exercise control over you, nor has been in a relationship described in IRC
    Section 4946(a)(1)(C) through 4946(a)(1)(G).
  • The transfer of assets will further your exempt purpose and be used to fund your programs in the future.
  • You carry on a program to solicit funds to support your activities and reasonably expect to attract public
    support after this grant.
  • No material restrictions or conditions (within the meaning of Treas. Reg. 1.507-2(a)(7)) have been imposed
    by B in connection to the donation.
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 - Rulings, 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.
We've sent a copy of this letter to your representative as indicated in your power of attorney.
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
Enclosures:
Redacted Letter 4787
Letter 437




                                                                                             Letter 4787 (Rev. 11-2021)
                                                                                             Catalog Number 58230Y