Set-Asides

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Department of the Treasury fm
Internal Revenue Service
IRS
Tax Exempt and Government Entities
P.O. Box 2508
Cincinnati, OH 45201
Release Number: 202521029
Release Date: 5/23/2025
LEGEND
X = Organization
Y = Organization
Z = State m dollars = Amount q dollars= Amount r dollars= Amount
N = Date
0 = Date
Dear
Why you are receiving this letter
Date:
02/27/2025
Employer ID number:
Person to contact:
Name:
ID number:
Telephone:
UIL: 4942.03-07
We received your December 06, 2023 request for approval of a set-aside under Internal Revenue Code (IRC) Section 4942(g)(2). Based on the information furnished, your request is approved.
You are recognized as tax-exempt under IRC Section 50l(c)(3) and as a private foundation under IRC
Section 509(a).
What you need to do
Document your approved set-aside(s) in your records as pledges or obligations. You must pay the set-aside amounts within 60 months after the date of the first set-aside, as required under IRC Section 4942(g)(2).
Take into account the amounts set aside when determining your minimum investment return under IRC Section 4942( e )( 1 )(A) and the income attributable to your set-asides when computing your adjusted net income under IRC Section 4942(f).
Description of set-aside request
You arc a private foundation with the meaning of Section 509(a) of the code.
The nature of the set-aside is to grant m dollars to X, which owns and maintains Y, a historic property located in Z, in order to restore the stone masonry, roof, and interior finishes, and to upgrade the electrical, plumbing, and HVAC systems. Y is listed on the National Register of Historic Places and X uses Y for educational programming and welcomes visitors and school groups to tour Y.
You are matching m dollars to X to fund approximately one-third of the estimated total cost of q dollars. X must raiser dollars of the remaining estimated costs. X will use m dollars solely to pay for the reimbursable costs of the project such as labor, materials, fees and permits. The reimbursable costs shall not include costs of publicity, planning, fundraising, legal or accounting services, financing, and staff salaries. This agreement is made effective as of N.
Letter 4797 (Rev. 1-2021)
Catalog Number 58293H
The set-aside is better accomplished for the purpose of the matching grant program and the preservation of control over the tenn of the project. You believe that the program is necessary to stimulate grants from the community at large, due to the extent and cost of the rehabilitation and restoration needed for Y. The approximate three-year period provided in the agreement to raise the necessary matching funds has been mutually agreed as allowing sufficient time to complete the anticipated capital campaign for the project.
You expect to pay the amount set-aside within 60 months after the set-aside, as required by Section 53 .4942( a)-3(b )( l) of the Regulations and Section 4942(g)(2)(B) of the Code. The agreement provides that the grant be paid by no later than O.
Basis for our determination
IRC Section 4942(g)(2)(A) states that an amount set aside for a specific project, which includes one or more purposes described in IRC Section 170( c )(2)(8 ), may be treated as a qualifying distribution if it meets the requirements ofIRC Section 4942(g)(2)(B).
IRC Section 4942(g)(2)(B) states that an amount set aside for a specific project will meet the requirements of this subparagraph if, at the time of the set-aside, the foundation establishes that the amount will be paid within five years and either clause (i) or (ii) are satisfied.
IRC Section 4942(g)(2)(B)(i) is satisfied it at the time of the set-aside, the private foundation establishes that the project can better be accomplished using the set-aside than by making an immediate payment.
Treasury Regulation (Treas. Reg.) Section 53.4942(a)-3(b)(l) provides that a private foundation may establish a project as better accomplished by a set-aside than by immediate payment if the set-aside satisfies the suitability test described in Treas. Reg. Section 53 .4942( a)-3(b )(2).
Treas. Reg. Section 53.4942(a)-3(b )(2) provides that specific projects better accomplished using a set-aside include, but are not limited to, projects where relatively long-tenn expenditures must be made requiring more than one year's income to assure their continuity.
In Revenue Ruling 74-450, 1974-2 C.B. 388, an operating foundation converted a portion of newly acquired land into a public park under a four-year construction contract. The construction contract payments were to be made mainly during the final two years. This constituted a "specific project." The foundation's set-aside of all its excess earnings for four years was treated as a qualifying distribution under IRC Section 4942(g)(2).
Additional information
This determination is directed only to the organization that requested it. IRC Section 611 0(k)(3) provides that it may not be used or cited as a precedent.
Visit www.irs.gov/setasides for more information.
We'll make this determination letter available for public inspection after deleting personally identifiable infonnation, as required by IRC Section 6110. Enclosed are Letter 437, Notice oflntcntion to Disclose -Rulings, and a copy of the letter that shows our proposed deletions.
• If you disagree with our proposed deletions, follow the instructions in the Letter 437 on how to notify us.
• If you agree with our deletions, you don't need to take any further action.
Letter 4797 (Rev. 1-2021)
Catalog Number 58293H
Keep a copy of this letter for your records.
If you have questions, you can call the contact the person shown above.
Enclosures:
Redacted Letter 4 797
Letter 437
Sincerely,
Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements
Letter4797 {Rev.1-2021)
Catalog Number 58293H