Private Foundations: Making Nontraditional and Foreign Grants in Compliance With IRS Regulations

PFs are subject to various regulatory requirements and excise taxes in addition to those imposed on public charities. Structured properly, a PF can make foreign grants, grants to individuals, and other unique grants. Failing to structure these grants properly can expose the organization to sanctions and jeopardize the deductibility of contributions.

Unrestricted donations to domestic public charities or PFs are deductible (barring certain AGI limitations); the same donation made to a foreign charity generally is not. A PF, however, can contribute to a foreign charity if it meets an equivalency test or exercises expenditure responsibility. The much more cumbersome expenditure responsibility benchmark requires that the PF monitor the organization's use of the funds, and the grantee provide complete accountability reports.

On the other hand, Revenue Procedure 2017-53 provides the steps taken by a PF to make a "good faith determination" that a foreign grantee qualifies as a qualifying public charity to meet the less burdensome equivalency test. Contributions, and the desire to contribute, to international organizations continues to increase dramatically. Additionally, PFs are charged with spending at least of its assets annually for charitable purposes; practitioners working with these foundations need to understand these rules to ensure these foundations make compliant foreign grants.

Listen as our panel of nonprofit experts explains requirements for grants to foreign organizations, individuals, other unique gifts, and best practices for meeting and documenting compliance with IRS requirements.

1. Grants to individuals
2. Grants to foreign organizations
   1. Expenditure responsibility
   2. Equivalency test
3. Other unique grants
4. Sanctions and penalties
5. Best practices for compliance

The panel will cover these and other critical issues:

• Meeting the expenditure responsibility requirements for foreign grants
• Complying with Revenue Procedure 2017-53 to meet the equivalency test
• Qualifying for advance IRA approval for individual gifts under IRC Section 4945(g)
• Documenting compliance for individual grants made without advance approval

Learning Objectives

After completing this course, you will be able to:

• Identify qualification requirements for advance approval of gifts to individuals
• Determine requirements to meet the equivalency test for foreign gifts
• Decide how best to document compliance with IRS grant requirements
• Ascertain when disbursements to individuals by PFs are tax-free

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules; supervisory authority over other preparers/accountants. Specific knowledge and understanding of cost allocation principles; familiarity with government standards for nonprofit organizations receiving federal grant monies

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).