Grants to Individuals

Department of the Treasury
Internal Revenue Service
Tax Exempt and Government Entities
Rele,1se Number: 202:.1360::?. l
Relea:,e Ihte: 9,6.202.J
LEGEND
\V = Name
X;;;;;;Name
Y = State r=Nmuber s dd!ars ~
0 Dc,llar Anwunt t dollms '' Dollar A1n(n1n1 u Number
Denr
Date: 06/13/2024
Person to conta<::t:
Narne: iD number:
T e!epl,one: t!IL: 4945J}4-04
\';masked fr,r adYance appnH"al of your employer-rdatt•d ,cholarship procedm~::,. rn1d2r Iulerual Revcm1.;; Code Secriun ( IRC) 1945(g)( l ). You reqne~te(l ap(H'Qval nf yonr ~.clwlarship pwgram to fund the t·ducation of c::rtain qu::ihfyinf sntdi;;nts.
This appr(•val is required because IRC Section 49.t5 pn)\·ides ii..)r the imp(':Sition of taxes DH each taxable expenditure of a private foundation. IRC Section -t945(d)(3) provides that the term !'taxable expenditure" indude;;; any amount paid c,r incmred by a privnte fonndatiz,n as a grant to an mdiYidual for traYeI. sntdy. or similar pmpc}.::.es by the individual. m1less the grnnt satisfies the advance approval. requirement ofIRC Se~tion -1945(g).
Our determination
\Ve approved your pmci:dmc:-: for mvarding employer-related s1..~holan,Jups Based 011 !lie infonnation you ',nbrnitte.J. and a~suu1ing yo11 ,Yill i:.·,mducl your 111ngra111 as propot.ed. \Ne dtk·m1i11ed that y11ur pK,('ednre::. for ;nvarding ernployer-rdated scholarship:, m;;el ,hi:.· retp1iremenh of JRC Section-~ 9l5(g.)( I). ,,\:, a re'~ult •.::xpenditure-; yon make nnt.lcr lhc-.;;e pn,c(•dures , … -c-.11't be taxable . . \•.v~mh nrndc nuder these procedures an: ~d1o!f1rship or followship µrant~ ,md are not ta:rnble fo the recipient,; if they use them for qualifo:d tui1inu and related expt.'tlSe:-. (snbjec1 lo the limi:a,ions proVided in YRC Sedion l l 7(h}).
Description of your request
Your letter indicates you will openlte a scholarship program for eligible children of employees of\\', Your sdwlarship is called the X. Your scholarship initially C>nly included children of employees of your principal office in the Slate ofY. You are m:nv expandi11g your prc,g:ram to indude children of the employees of your dom<2:;tic and international wholly cwn~d opi::rational subsidiaries. \{cm may award up to r scholarships per year. limited to no more thau s i:folfors each. The maxiumm dollar anwm1t of scholarships per year w.ill be t dollars.
Le-tier 4792 (Rev. 1-2022}
CatHk)'1J Nurnhcr f-,n.t,rrr
Applicants will include children. stepchildren, legally adopted children under legal guardianship of your employees. Each applicant must be a high school graduate or on course to graduate from high school and attend college, The children must be u years of age or under, ofa full-time or part-time employees of W, who have a minimum of one year employment 'The scholarship \viii not be used as an inducement of employment fi.;r parents and if the parent no longer becomes employed with W, frlr any reason, the scholarship will not be rescinded.
The scholarship will be based on the academic merit of the recipient. Each applicant must go through an up plication process and selection will be based on the quality of the essay submitted with the application. future potential and leadership ability. academic performance, extracurricular activities, and civic involvement/\ character interview may also be conducted. The scholarships arc renewable. and previous recipients are entitled to reapply in subsequent years.
You will publicize the scholarship program to employees using: (i) printed announcements and posters. (ii) W's newsletter. (iii) W's email system and/or (iv) W's 'vvebsite.
Your selection committee ls determined by your board of directors. ,vill consist of at least three members. and relaiives of your selection committee members are not eligible to apply for the scholarship. You have indicated you will maintain records to ensure the funds provided will continue to be used for the purposes they were intended. You have procedures in place if it is discovered that funds have been misused. You have also indicated that prior to payment of all international awards, all paiiies ·will be verified with the Office of Foreign Assets Control to confirm that mme of the individuals or entilies involved have been identified as supporting or engaging in terrorist activities.
You represent that you \Viii complete the following:
* Arrange to receive and review grantee reports annually and upon completion of the purpose for which the grant was U'\varded, ® Investigate diversion of funds from their intended pmposes.
* 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 future diversions will not occur and that grantees ,viii 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,
• r dentif'.y a grantee is a disqualified person.
* Establish the amount and purpose of each gram, 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 frnmdations. 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 follmving requirements of l RC Section 4945(g) is not a taxable expenditure.
@ The foundation awards the gram on an objective and nondiscriminatory basis.
• The IRS approves in advance the procedure fi:ir awarding the grant.
G The grant is a scholarship or fellowship subject to IRC Section t l 7(a), ,. The grant is to be used for study at an educational ol'ganization described in me Section 170(6)( l)(A)(ii).
Letter 4792 (Rev. 1 m2022)
Cata!og Number 58263T
Revenue Procedure (Rev. Proc.) 76-47. provides guidelines to determine \Vhether grants a private frmndation makes under an employer-related program to employees or children of employees are scholarship or fellowship grants subject to the provisions of lRC Section l l 7(a). If the program satisfies the seven conditions in sections 4.01 through 4.07 of Rev. Proc. 76-47 and meets the percentage tests described in Section 4.08 of Rev. Proc. 76-47, we will assume the grants are subject to the provisions of IRC Section ! l 7(a).
You represented that your grant program will meet the requirements of either the 25% or ! 0% percentage test in
Rev. Proc. 76-47. These tests require that
@ The number of grants awarded to employees' children in any year ,v<m't exceed 2Y% of the number of employees' children who were eligible fbr grants. were applicants fix grants, and were considered by the selection committee for grants, or ~ The number of grants awarded to employees' children in any year won't exceed l 0% of the number of employees' children who were eligible frH" grants (whe1her or not they submitted an application), or @ The number of grams awarded to employees in any year \v011't exceed l 0% of the number of employees who were eligible for grants, were applicants for grants, and \Vere considered by the selection committee for grants.
You fu1iher represented that you will include only children ,vho meet the eligibility standards described in
Rev. Proc. 85-5 l, \Vhen applying the l01~{1 test to employees' children.
In determining how many employee children are eligible for a scholarship under the l 0% test, a private foundation may include only those children who submit a written statement or who meet the foundation's eligibility requirements. They must also satisfy certain enrollment conditions.
You represented that your procedures for a\-varding grants under this program will meet ihe requirements of
Rev. Proc, 76-47. ln patticular:
@ An independent selection committee whose members are separate from you, your creator, and the employer will select individual grant recipients.
~ You will not use grants to recruit employees nor ,vm you end a grant if the employee leaves the employer.
@ You will not limit the recipient to a course of study that would pa11icularly benefit you orthe employer.
Other roi:u!ititms that apr>Jy to this determination
@ This determination 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.
The effective date of our approval is v,hich is the date your request was submitted.
* This detennination is in effect if your procedures comply ,vith Sections: 4.01 through 4.07 of Revenue Procedure 76-47 and either of the percentage tests of Section 4.08. l f you establish another program covering the same individuals, that program must also meet the percentage test.
• This determination applies only to you. lt may not he cited as a precedent.
$ You cannot rely on the conclusions in this letter if the facts you provided have changed substantially.
You must report any significant changes to your prog:rnm to the IRS at
Internal Revenue Service
Exempt Organizations Detenninations
TE/GE Stop 3 J A Team 105
P.O. Box 12192
Covington. KY 41012-0192
Letter 4792 {Rev. 1-2022)
Catalog Number 58263T
~ You can't award grants lo your creators, officers. directors, tmstees, foundation managers. or members of selection committees or their relatives.
~ All funds distributed to individuals must be made on a charitable basis and fi.111her the purposes of your organization. You cmmo! award grants for a purpose that ls inconsistent with IRC Section i 70{ c )(2)(B).
@ You should keep adequate records and case histories so that you can substantiate your gram distributions ,vith the IRS if necessary.
We'll make this detennination letter available for public inspection after deleting personally identifiable information, as required by IRC Section 6 l i 0. We've enclosed Letter 437, Notice of Intention to Disdos0 -Rulings, and a copy of the letter that shovvs our proposed deletions.
* if you disagree with our proposed deletions, fbllow the instructions in the Lener 437 on hO\v to notif'.y us.
$ If you agree with our deletions. you don't need to take any further action.
We've sent a copy of th is letter to your representative as indicated in your power of attorney.
Please keep a copy of this letter in your records. ff you have questions. you can ccmtactthe person shown at the top ofthis letter.
Enclosures:
Letter 437
Sincerely,
Stephen A. Martin
Director. Exempt Organizations
Rulings and Agreements
Letter 4792 {Rev. 1-2022)
Catalog Number 58263T