What is tipping and how can it affect an opportuny for a grant?

Tipping has to do with the "publicness" of an organization. One of the requirements of a public charity is that it can meet the public support test. This test "shows that a significant amount of the organization's ongoing support (normally one third) is made up of gifts or contributions from a wide cross-section of the general public and not from one person, one company or one family." It is possible to make a grant that may jeopardize an organization's public charity status because the amount of the award is too large in relation to the level of past IRS qualifying public support funds. Therefore, it is possible to tip that organization from a public charity into a private foundation status. In our experience, tipping tends to be more of a possibility with new or smaller organizations.

This is a simplified explanation of the problem of tipping. The actual calculations can be quite complicated. An important source of detailed information is a book published by the Council on Foundations entitled, How to Calculate the Public Support Test, by John A. Edie, who was General Counsel and Vice President for COF.

Some of the information and the above quote are from another book published by Council on Foundations entitled, Family Foundations & The Law: What you Need to Know, also by John A. Edie, with the quote found on page 11.