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Abstract: 

IRC §4942 permits foundations to meet their minimum distribution requirements by using “set-asides” approved in advance by the IRS. Set-asides are appropriate for projects that require relatively long-term grants or expenditures to ensure the continuity of a particular charitable project or program-related investment, or where grants are made as part of a matching grant program. This article examines when and when not to use set-asides, how to be sure any set-asides meet IRC permissibility guidelines, how to use IRS Form 8940 to obtain approval for a set-aside, and how to meet recording and reporting requirements. Includes illustrative examples of qualifying set-aside approved by the IRS in recently issued private letter rulings.

Keywords: “Specific Project” Set-Asides; Minimum Distribution Requirement; IRS Form 8940; Contingent Set-Asides

Affiliations:  1: Strasburger & Price, LLP.