In Free Fertility Foundation v. Commissioner, the Tax Court affirmed the IRS’ denial of 501(c)(3) status to The Free Fertility Foundation—an organization that provides its founder’s sperm “free of charge to women seeking to become pregnant through artificial insemination or in vitro fertilization.” Interestingly, the court stated the “free provision of sperm may, under appropriate circumstances, be a charitable activity.” But The Free Fertility Foundation did not qualify because the class of potential beneficiaries is “not sufficiently large to benefit the community as a whole.” After all, the class of potential beneficiaries is limited to those that want the founder to be the biological father of their children. Further, the founder and his father choose recipients from applicants based on a “very subjective, and possibly arbitrary” process that includes a questionnaire on topics such as an applicant’s education, ethnicity, geographic location, fertility history and contribution to their communities.

I will be interested to see if the Free Fertility Foundation changes its operations to be consistent with the Tax Court’s guidance—if it added some more sperm donors and selected recipients from among the applicants based on health-related issues, it’s next letter from the IRS could be a determination letter. I asked my wife what she thought of the case (she is not a student of the laws governing tax-exempt organizations—other than listening to my ramblings from time to time—but she is 3 months pregnant and I thought she might have a different perspective than I). Her take on it was: “Don’t ever interrupt me during a commercial-free airing of Anne of Green Gables. But while you are up, get me some ice cream.”  So there you have it.