§ 509. Private foundation defined
(a)
General rule
For purposes of this title, the term “private foundation” means a domestic or foreign organization described in section
501
(c)(3) other than—
(2)
an organization which—
(A)
normally receives more than one-third of its support in each taxable year from any combination of—
(ii)
gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in an activity which is not an unrelated trade or business (within the meaning of section
513), not including such receipts from any person, or from any bureau or similar agency of a governmental unit (as described in section
170
(c)(1)), in any taxable year to the extent such receipts exceed the greater of $5,000 or 1 percent of the organization’s support in such taxable year,
(3)
an organization which—
(A)
is organized, and at all times thereafter is operated, exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more specified organizations described in paragraph (1) or (2),
(B)
is—
(C)
is not controlled directly or indirectly by one or more disqualified persons (as defined in section
4946) other than foundation managers and other than one or more organizations described in paragraph (1) or (2); and
(b)
Continuation of private foundation status
For purposes of this title, if an organization is a private foundation (within the meaning of subsection (a)) on October 9, 1969, or becomes a private foundation on any subsequent date, such organization shall be treated as a private foundation for all periods after October 9, 1969, or after such subsequent date, unless its status as such is terminated under section
507.
(d)
Definition of support
For purposes of this part and chapter 42, the term “support” includes (but is not limited to)—
(2)
gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities in any activity which is not an unrelated trade or business (within the meaning of section
513),
(3)
net income from unrelated business activities, whether or not such activities are carried on regularly as a trade or business,
(5)
tax revenues levied for the benefit of an organization and either paid to or expended on behalf of such organization, and
(6)
the value of services or facilities (exclusive of services or facilities generally furnished to the public without charge) furnished by a governmental unit referred to in section
170
(c)(1) to an organization without charge.
Such term does not include any gain from the sale or other disposition of property which would be considered as gain from the sale or exchange of a capital asset, or the value of exemption from any Federal, State, or local tax or any similar benefit.
(e)
Definition of gross investment income
For purposes of subsection (d), the term “gross investment income” means the gross amount of income from interest, dividends, payments with respect to securities loans (as defined in section
512
(a)(5)), rents, and royalties, but not including any such income to the extent included in computing the tax imposed by section
511. Such term shall also include income from sources similar to those in the preceding sentence.
(f)
Requirements for supporting organizations
(1)
Type III supporting organizations
For purposes of subsection (a)(3)(B)(iii), an organization shall not be considered to be operated in connection with any organization described in paragraph (1) or (2) of subsection (a) unless such organization meets the following requirements:
(A)
Responsiveness
For each taxable year beginning after the date of the enactment of this subsection, the organization provides to each supported organization such information as the Secretary may require to ensure that such organization is responsive to the needs or demands of the supported organization.
(B)
Foreign supported organizations
(i)
In general
The organization is not operated in connection with any supported organization that is not organized in the United States.
(ii)
Transition rule for existing organizations
If the organization is operated in connection with an organization that is not organized in the United States on the date of the enactment of this subsection, clause (i) shall not apply until the first day of the third taxable year of the organization beginning after the date of the enactment of this subsection.
(2)
Organizations controlled by donors
(A)
In general
For purposes of subsection (a)(3)(B), an organization shall not be considered to be—
(i)
operated, supervised, or controlled by any organization described in paragraph (1) or (2) of subsection (a), or
(ii)
operated in connection with any organization described in paragraph (1) or (2) of subsection (a),
if such organization accepts any gift or contribution from any person described in subparagraph (B).
(B)
Person described
A person is described in this subparagraph if, with respect to a supported organization of an organization described in subparagraph (A), such person is—
(i)
a person (other than an organization described in paragraph (1), (2), or (4) of section
509
(a)) who directly or indirectly controls, either alone or together with persons described in clauses (ii) and (iii), the governing body of such supported organization,