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Abstract: 

Ordinarily, a grant that a private foundation pays to an individual for travel, study, or similar purposes is treated as a taxable expenditure subject to excise tax under IRC §4945. However, a grant is not treated as a taxable expenditure if it meets several criteria including objective, non-discriminatory bases for awards; IRS approval of award procedures; and meeting “qualified” scholarship or grant tests under IRS §117 or IRC §74(b). The beginning of the 2016–2017 academic year provides a timely opportunity to examine the foundation scholarship and over the past 12 months. Here are nearly 50 letter rulings reflect the variety of programs that private foundations can use to advance their exempt purposes and may inspire other foundations to develop creative programs of their own. Included are PLRs authorizing grant and scholarship programs for helping employees and fostering business values; grants with a regional focus; grants for sports, leadership, and other specified educational programs; grants for students with special abilities or needs; apprenticeship programs; grants funding sabbaticals, internships, and hands-on training; grants supporting the arts and creative pursuits; programs for community service and religion-based activities; grants fostering entrepreneurship; and grants promoting health and health care.

Keywords: Private letter rulings; educational grants and scholarships; non-tuition educational grants

Affiliations:  1: Strasburger & Price, LLP.