Community Concerns
Some residents in Richardson have expressed concerns about the nature of the Foundation. Their concerns are two-fold:
- a charitable foundation shouldn’t be able to give all of its proceeds to a municipality, rather than spending the money on its core mission
- why is a 501(c)3 needed in any case, when contributions to a municipality for the public good are allowed by the IRS?
The first issue rises from a misunderstanding of IRS regulations for 501(c)3 entities (charitable foundations). As the IRS notes online: "The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes … erecting or maintaining public buildings, monuments, or works…". Clearly, supporting a regional performing arts center owned by a municipality falls under "maintaining public buildings", which makes it legal for the Eisemann Center Foundation to give contributions to the City of Richardson specifically to support the Eisemann Center. One only needs to think of the relationship of The John F. Kennedy Center for the Performing Arts and the Ford Foundation to realize that this relationship is neither unusual nor illegal.
The second issue is more subtle. Since individual contributions to a municipality for purposes such as maintaining a public building are considered deductible by the IRS ("Charitable contributions to governmental units are tax-deductible under section 170(c)(1) of the Internal Revenue Code if made for a public purpose"), the question arises as to why a separate 501(c)3 is required.
The reason, as seen in the mission statement above, is that some charitable foundations have it written into their bylaws that they can donate only to other 501(c)3 entities. According to Michelle Thames, Assistant City Manager of the City of Richardson, the Texas Instruments Foundation is one of those charitable foundations that are allowed to donate only to other charitable foundations. Thus, the problem is not with the IRS or the Eisemann Center Foundation but with the bylaws of the charitable foundations that might want to donate money for the support of the Eisemann Center.
Read more about this topic: Charles W. Eisemann Center For Performing Arts, Eisemann Center Foundation
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