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Abstract: 

There are a number of ways an organization can escape private foundation classification. Publicly supported entities and other traditional charities (schools, hospitals, churches, etc.) are excluded from that undesirable status under IRC § 509(a)(1). Other organizations, primarily those which provide some sort of services or facilities in a fashion that does not constitute an unrelated trade or business, can qualify under a fairly complex mathematical test in IRC §509(a)(2). The interest and dividend income received by the old organization from its portfolio of micro loans and from investments undertaken pursuant to its winding up and liquidation plan qualifies as gross receipts from a charitable activity.

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