Grant qualifies as an unusual grant for public support testing

Plain-English summary

A public charity focused on local history expected a large grant for a three-year planning and capacity project. It asked the IRS to treat the contribution as an unusual grant so its size would not jeopardize the charity's public support status. The IRS agreed, citing the donor's lack of prior ties or control, the cash form of the grant, the charity's past public support, and its representative governing body. The unusual grant rules allow an eligible contribution to be excluded from the public support calculation.

Ruling snapshot

• Question: Does the proposed grant qualify as an unusual grant under the public support regulations?
• Outcome: Approved; the IRS concluded the grant qualifies as an unusual grant.
• Key authorities: IRC §§ 170(b)(1)(A)(vi), 509(a)(1); Treas. Reg. §§ 1.170A-9(f)(6)(ii), 1.509(a)-3(c)(4).

Full text (IRS public release)

Department of the Treasury Date:
Internal Revenue Service 07/13/2026
Tax Exempt and Government Entities

IRS Employer ID number:

Person to contact:
Name:
ID number:
Telephone:
Release Number: 202641017
Release Date: 10/9/26
LEGEND
UIL: 509.02-01
B = Place
C = Place
D = Place
F = Entity
x 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 classified as public charity under IRC Sections 509(a)(1) and 170(b)(1)(A)(vi). You conduct archaeological exploration and historical research to collect, preserve and display artifacts, records and information from documented and oral history resources to tell the story of the people and events of B, C, and D from prehistoric times to the mid-1900s; to provide innovative educational opportunities, experiences and events to visitors, students, residents and others; and to facilitate the local community’s capacity for maximizing its cultural and historic resources through community-based tourism.

You are expecting to receive a grant of x dollars from the F. The grant will fund a three-year planning and capacity building project to amplify your work and success in providing public benefit through educational programs, activities, and events, and to strengthen your internal infrastructure to attain long-term sustainability.

There are no prior or current relationships between you and the F as organizations, and no relationships exist between your trustees, directors, and officers and the F. The F does not exercise any control over you. There are no conditions you must satisfy prior to the receipt of the grant from the F, and you have received no previous grants from the F.

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.

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

Application of Law:

The grant meets the requirements of Treas. Reg. Section 1.170A-9(f)(6)(ii) because the grant is from a disinterested party which:

• Was attracted by reason of your publicly supported nature;
• Is unusual or unexpected with respect to the amount; and
• Will adversely affect your status 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 was not made by a person or organization who created or previously contributed funds to you. F was not your creator, and has not made any contributions to you in the past.

• The F does not stand in a position of authority or exercise control over you.
• The grant is in the form of cash.

• Prior to the receipt of this contribution, you have carried on an actual program of public solicitation and exempt activities and have been able to attract a significant amount of public support.

• You have a large representative governing body.
• You have met the public support test in past years.
• It can be assumed you will be able to maintain a level of public support in the future.

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.

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