On August 15, 2008, the Internal Revenue Service (“Service”) publicly released a redacted final adverse determination letter (PLR 200833022 (May 21, 2008)) denying Section 501(c)(3) status to a nonprofit organization (“M”) created to provide student housing for colleges and universities through the issuance of tax-exempt bonds. The Service’s denial of exempt status to M was based on the failure of M to establish that its operations furthered a charitable purpose and not a commercial trade or business. The Service stated in its letter that “[p]roviding services at cost and solely for exempt organizations is not sufficient to characterize the activity as charitable.” The Service suggested that the result of the letter would have

been different had the housing been provided free or below cost to low-income students, or had M been controlled by the colleges, universities, or communities it served.

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