Internal Revenue Service
Rev. Rul. 69-175
1969-1 C.B. 149
A nonprofit organization, formed by parents of pupils attending a private
school, that provides school bus transportation for its members' children
serves a private rather than a public interest and does not qualify for
exemption under section 501(c)(3) of the Code.
Rev. Rul. 69-175
Advice has been requested whether under the circumstances described below a
nonprofit organization created to provide bus transportation for certain
school children is exempt from Federal income tax under section 501(c)(3)
of the Internal Revenue Code of 1954.
The organization was formed by the parents of pupils attending a private
school exempt from Federal income tax under section 501(c)(3) of the Code.
All control over the organization rests in the parents. The organization
provides bus transportation to and from the school for those children whose
parents belong to the organization. Parents must pay an initial family fee
and an additional annual charge for each child. The organization's income
approximately equals the expenses involved in its operations.
Section 501(c)(3) of the Code provides for the exemption from Federal
income tax of organizations organized and operated exclusively for
charitable or educational purposes.
Section 1.501(c)(3)-1(d)(1)(ii) of the Income Tax Regulations provides that
an organization is not organized or operated exclusively for any exempt
purpose set forth in section 501(c)(3) of the Code unless it serves a
public rather than a private interest.
When a group of individuals associate to provide a cooperative service for
themselves, they are serving a private interest. By providing bus
transportation for school children, under the circumstances described, the
organization enables the participating parents to fulfill their individual
responsibility of transporting their children to school. Thus, the
organization serves a private rather than a public interest. Accordingly,
it is not exempt from Federal income tax under section 501(c)(3) of the