Grants to Individuals

Department of the Treasury
Internal Revenue Service
IRS
Tax Exempt and Government Entitles
P.O. Box 2508
Cincinnati, OH 4520 l
Number: 202244028
Release Date: 11/4/2022
LEGEND
W = Scholarship Program
X = Number of Grants
Y = Application Manager z dollars = Grant Ammmt
Dear
Date:
08/10/20~'.2
Taxpayer 1;0 nurr,ber:
Person to cc,ntac:t:
UIL: 494:,.04,-04
You asked for advance approval of your scholarship procedures under Internal Revenue Code (IRC) Section 4945(gXI ). You requested approval of your scholarship program to fimd the educatio11 ,;,f certain qualifying students.
This approval is required because IRC Section 4945 provides for the imposition of taxes on each taxable expenditure of a private foundation. IRC Section 4945( d)(3) provides that the term ,.taxable expenditure" includes any amount paid or incurred by a private foundation as a grant to an individual for travel, study, or similar purposes by the individual, unless the grant satisfies the advance approval requirement of IRC Section 4945(g).
Our determination
We approved your procedures for awarding scholarships. Based on the information you submitted, and assuming you will conduct your program as proposed, we determined that your procedure·s for awarding scholarships meet the requirements of IRC Section 4945(g)(l ). As a result, expenditures you make under these procedures won't be taxable.
Additionally, awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified tuition and related expenses ( subject to the linritations provided in IRC Section 117(b)).
Description of your request
Your letter indicates you will operate a grant program called the W.
The purpose of the Wis to support the educational advancement of youths by provid.iug grants to graduating high school seniors who plan to pursue postsecondary degrees at accredited educational institutions. You anticipate awarding approximately X grants worth z dollars each; however, the actual number and amount of granb will vary based on annual reviews of your available resources.
To advertise your program, you will use social media, yom website, and email lists, which will include the uttter 4792 (Rev.1-2022) Caitalog Nt.mber 58263T emails of various high school counselors.
To be eligible, applicants must be high school seniors with a cumulative GPA of 3.0 who participated in a college readiness program during their last two years of high school and will qualify to receive a Pell Grant.
Eligible applicants must submit a completed application form, one recommendation letter from an academic reference, and a presentation in any medium (e.g., art, video, essay, etc.) explaining how the applicant overcame a challenging obstacle.
Y will manage the screening and scoring of your applications and provide this information directly to your scholarship committee who will review the applications and make final recommendations to your trustees.
Selection criteria will include academic achievement, demonstrated leadership and character, an interview, and participation in extracurricular activities and college readiness programs.
After proof of enrollment is provided, grants will be paid directly to the recipients' qualifying educational institutions. Upon review by your foundation, grants may be renewed up to four years for recipients who remain in good academic standing at their respective schools. If a recipient is not enrolled or not in good standing, any remaining funds will be forfeited and returned to you. In addition, grants must be used within 12 months from the award notification date unless recipients are provided an extension.
You represent that you will complete the following:
• Arrange to receive and review grantee reports annually and upon completion of the purpose for which the grant was awarded,
• Investigate diversion of funds from their intended purposes,
• Take all reasonable and appropriate steps to recover the diverted funds and ensure other grant funds held by a grantee are used for their intended purposes, and
• Withhold further payments to grantees until you obtain grantees' assurances that futurn diversions will not occur and that grantees will take extraordinary precautions to prevent future diversion from occurring.
You also represent that you will:
• Maintain all records relating to individual grants including information obtained to evaluate grantees,
• Identify a grantee is a disqualified person,
• Establish the amount and purpose of each grant, and
• Establish that you undertook the supervision and investigation of grants described above.
Basis for our determination
IRC Section 4945 imposes excise taxes on the taxable expenditures of private foundations. A taxable expenditure is any amount a private foundation pays as a grant to an individual for travel, study or other similar purposes.
However, a grant that meets all the following requirements of IRC Section 4945(g) is not a taxable expenditure.
• The foundation awards the grant on an objective and nondiscriminatory basis.
• The IRS approves in advance the procedure for awarding the grant.
• The grant is a scholarship or fellowship subject to the provisions ofIRC Section l l 7(a).
• The grant is to be used for study at an educational organization described in IRC Section l 70(b)(l)(A)(ii).
Letter 4792 (Rev. 1-2022)
Catalog Number 58263T
Other conditions that apply to this determination
• This detennination only covers the grant program described above. This approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request.
• This detennination app1ies only to you. It may not be cited as a precedent.
• You cannot rely on the conclusions in tbis letter if the facts you provided have changed substantially.
You must report any significant changes to your program to tbe IRS at:
Internal Revenue Service
Exempt Organizations Detennmations
• You can't award grants to your creators, officers, directors, trustees, fotmdation managers, or members of selection committees or their re1atives.
• All fimds distributed to individuals must be made on a charitable basis and furtbtir the purposes of your organization. You cannot award grants for a purpose that is inconsistent with me Section l 70(c)(2)(B).
• You should keep adequate records and case histories so that you can substantiate yow grant distributions with the ms if necessary.
We'll make this detennination letter available for public inspection after deleting personally identifiable information, as required by me Section 6110. We've enclosed Letter 437, Notice of hltention to Disclose -Rulings, and a copy of the Jetter that shows our proposed deletions.
• lf you disagree with our proposed deletions, follow the instructions in the Letter 43 7 on how to notify us.
• lf you agree with our deletions, you don't need to take any furtber action.
We've sent a copy of this letter to your representative as indicated in your power of attorney.
Please keep a copy of this letter in your records. lfyou have questions, you can contact the person shown at the top of this letter.
Enclosures:
Letter 437 cc:
Sincerely,
Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements
Letter 4792 (Rev. 1-2022)
Cailak>g Number 58263T