WE DID IT! We've resubmitted our application for Recognition of Exemption form 1023 in order to be recognized as a Private Operating Foundation and to get advance approval of our grant-making procedures, which allows us to grant scholarships directly.
When we were starting out, we relied on professionals for help, but this was something that got overlooked with our original application. After years of research, we finally felt confident enough to do it on our own.
Now, you might be thinking, "Hold on, this sounds like some boring business stuff." Well, it's true, our journey does involve some technical details, but it's essential to understand the significant changes we're making.
Why We're Becoming a Private Operating Foundation
Established in July of 2021, the Kathryn Leigh Thurgaland Foundation received recognition as a Private Foundation from the IRS. However, our business practices have always been aligned with the principles of a Private Operating Foundation. Now, we're taking steps to formalize this alignment for greater accuracy, and a clearer description of the type of nonprofit we are.
A Private Foundation is usually established to grant money to charitable causes, primarily funded through a one-time endowment.
A Private Operating Foundation, on the other hand, devotes most of its resources to actively conducting its charitable activities. It's a bit like a hybrid between a Private Foundation and a Public Charity, with an emphasis on hands-on engagement.
What Does This Mean for You, Our Donors?
One crucial aspect is how this change impacts our donors:
Private Foundations: Contributions are tax-deductible up to 30% of adjusted gross income.
Private Operating Foundations: Contributions are tax-deductible up to 50% of adjusted gross income.
Public Charities: Contributions are tax-deductible up to 60% of adjusted gross income.
This means your generous support can now have an even greater tax benefit for you.
News from the IRS
For those who itemize their tax returns, here's some important information regarding donations to charities. As part of the Tax Cuts and Jobs Act of 2017, the 50% limit for contributions to a Private Operating Foundation was temporarily raised to 60% of AGI for cash contributions through taxable years ending December 31, 2025, and was increased to 100% of AGI for cash contributions in 2020 and 2021 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Be sure to speak to your tax advisor to take full advantage of these benefits. For more information check out these sites: taxfoundation.org, law.cornell.edu, irs.gov, investopedia.com, and congress.gov.
The Timeline and What to Expect
The IRS can be slow-moving, and this process will take some time. We're currently finalizing the required documents and eagerly awaiting the IRS determination. Rest assured, we will share this milestone with you as soon as we receive their decision.
In the meantime, we appreciate your continued support, which keeps us moving forward in our mission to honor Kathryn's legacy and help families who have lost a child, just as we were once supported by friends and family.
We understand that these changes might seem intricate and difficult to understand, but they signify our commitment to making a more profound impact on the world in Kathryn's name. We invite you to explore the link below for more details on these changes and their implications for our organization.
With your continued support, we will carry Kathryn's spirit forward through art, music, dancing, and performing arts, and provide memorial scholarships to students who share her passion for life.
Thank you for being part of this journey with us. Your generosity is transforming lives and preserving the enduring legacy of Kathryn.
With gratitude, the Thurgaland Family