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of social welfare by organizations designed to
accomplish any of the above purposes, or (i) to lessen
neighborhood tensions; (ii) to eliminate prejudice and
discrimination; (iii) to defend human and civil rights
secured by law; or (iv) to combat community
deterioration and juvenile delinquency. * * * [Sec.
1.501(c)(3)-1(d)(2), Income Tax Regs.]
However, regardless of the presence of what might otherwise
be proper exempt purposes, an explicit exception to section
501(c)(3) status exists in that:
An organization is not organized or operated
exclusively for one or more of the purposes specified
in * * * [section 501(c)(3)] unless it serves a public
rather than a private interest. Thus, * * * it is
necessary for an organization to establish that it is
not organized or operated for the benefit of private
interests * * * [Sec. 1.501(c)(3)-1(d)(1)(ii), Income
Tax Regs.]
Private interests within the meaning of this rule include not
only related persons and insiders but also unrelated and
disinterested private parties. See id.; American Campaign
Academy v. Commissioner, supra at 1068-1069. In other words, if
an organization benefits private interests, it will be deemed to
further a nonexempt purpose. See American Campaign Academy v.
Commissioner, supra at 1066. The organization will thereby be
prevented from operating primarily for exempt purposes “absent a
showing that no more than an insubstantial part of its activities
further the private interests or any other nonexempt purposes.”
Id.
The burden of proof rests on petitioner to demonstrate,
based on materials in the administrative record, that it is
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