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Abstract: 

A private foundation that intends to make a grant to a foreign organization that does not have an IRS determination letter stating that it is described in IRC §501(c)(3) generally must exercise expenditure responsibility over the grant or (1) be subject to excise taxes under IRC §4945 for a taxable expenditure, and (2) have the grant not be treated as a qualifying distribution under IRC §4942.1 A private foundation that would prefer not to exercise expenditure responsibility can avoid these negative results if it makes a good-faith determination that the foreign grantee qualifies as a qualifying public charity (i.e., an “equivalency determination”) even though the foreign grantee has no IRS determination letter recognizing it as tax-exempt.

Keywords: IRC §170; Rev. Rul. 64-128

Affiliations:  1: Clark Hill Strasburger.