Our 509 (a)(3) supporting organization has changed over time and no longer functions in a supporting role for another organization. How should we consider changing our designation with the IRS?
An organization normally accepts supporting organization status under section 509(a)(3) of the Tax Code when it cannot meet the public support requirements of a public charity under Sections 509(a)(1) or 509(a)(2) and it has, or creates, a qualifying relationship with another organization that is a public charity (or a governmental entity). A supporting organization is, for the most part, treated as a public charity—and not a private foundation—but is subject to some significant limitations not imposed on 509(a)(1) or 509(a)(2) public charities. (See Ready Reference Page: “Supporting Organizations Qualify as Public Charities”)
A supporting organization will lose its supporting organization status if the organization or organizations that it is formed to support lose their public charity status, if it doesn’t maintain the proper relationship, or if it doesn’t actually support the organization or organizations it said it would. If it is not publicly supported itself, it will become a private foundation unless it develops a qualifying relationship with another organization that it can support.
Therefore, you should figure out the classification to which you are entitled (or to which you aspire), either publicly supported based on your own sources of income, a supporting organization to someone else with perhaps a different relationship than your previous one, or a private foundation. You can go on record with the IRS by filing Form 8940 and supporting documentation.