Kosciusko County's largest health-oriented public foundation is in the process of changing from a public foundation to a private one.

Willis Alt, president of Kosciusko 21st Century Foundation Inc., commonly known as the K21 Foundation, said this week the change was mandated by the Internal Revenue Service, which regulates public and private nonoprofit organizations. A public foundation pays no taxes, while a private one may be required to pay taxes if it doesn't meet specific IRS rules.

Both forms of nonprofit foundations must qualify for their tax standing.

Alt said that as a public foundation, K21 had to comply with the IRS' public support test by, in part, showing that one-third, or 33 percent, or the organization's gross revenues come from community donations.

K21 Foundation began in 1999 with proceeds from the sale of Kosciusko Community Hospital to Quorum Health Group Inc. (Quorum merged with Triad in 2001). Because the foundation's income since then has mostly been a result of investments and interest, Alt said, K21 could not pass the one-third portion of the public support test. The IRS then changed K21's designation from public to private.

Now that K21 is private, Alt said, the foundation is required by the IRS to disburse 5 percent of its assets per year in grants.

For a foundation with approximately $64 million in assets, that would amount to more than $3 million per year.

"We had been giving out more than $1 million a year," Alt said. "The 5 percent is really not that onerous to us - (but) in a down market, we're going to feel a pinch."

If K21 each year does not award grants totalling 5 percent of its assets, the IRS imposes a 15 percent excise tax. The foundation would pay the taxes on the difference between 5 percent of foundation assets and the total of grants awarded, Alt said.

No internal mechanisms will change, said Jo Lemon, chairman of the K21 Foundation's board of directors. Grant applications still will be due Feb. 1 and Aug. 1, donations to the foundation still will be tax deductible, financial information still will be made available to the public on request and the foundation will continue to be controlled by Alt and a board of directors.

One thing that will change, however, is the K21 Foundation's ownership of Kosciusko Home Care and Hospice, which was not sold in 1999 along with KCH.

Now that K21 is a private foundation, Lemon said, any grants to Kosciusko Home Care and Hospice would not be included in the 5 percent requirement if KHCH had remained a part of K21.

"About 38 percent of our grants are to them," Alt said, "so we have to let them go."

It was a "comfortable departure," Lemon said, and K21 will continue to support KHCH through grants, but the hospice organization - which includes hospice and home care services, lifeline, allied services (assisted living) and a medical assistance program - will be autonomous.

Alt and Lemon said the medical assistance program is now 100 percent funded by K21, and that will continue.

What does the switch from a public to private foundation mean to the residents of Kosciusko County?

"We're hoping people, organizations and schools ask for money," Lemon said, emphasizing the foundation's focus on health and wellness projects.

And Alt said the K21 grant committee prefers to "fund things rather than salaries, because of the fluctuations of the (stock) market."

Examples of grants K21 has given in the past include $219,000 to Kosciusko County fire departments for infrared imaging cameras, $171,945 to Ivy Tech State College for expansion of the health services division, $36,536 to North Webster Community Center for basketball court renovation and $73,935 for public access defibrillators.

Anyone with a grant request for a health-related project should contact the 21st Century Foundation at 117 W. Center St., Suite C, Warsaw, 269-5188, or visit www.k21foundation.org [[In-content Ad]]