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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 certain criteria, including (1) being a “qualified” scholarship or fellowship grant, or a grant to achieve a specific objective or improve a particular skill; and (2) being awarded under a procedure that has been approved by the IRS.1 The advance approval requirement results in a regular stream of rulings that describe different scholarship and grant programs and shed light on the IRS’s approach to evaluating such programs. Here, we summarize thirty-six recent private letter rulings approving a wide range of educational purposes. These PLRs provide insight into IRS thinking, new ideas that might be worth considering for donors and clients, and guidance on as potential pitfalls to avoid.

Keywords: Scholarships and Education-Related Grants

Affiliations:  1: Clark Hill Strasburger.