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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. 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. The beginning of the 2019-2020 academic year provides a timely opportunity to examine the foundation scholarships and grant programs that have been approved over the past year. These 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.

Keywords: Ensuring “Blind” Selection of Recipients; Eligibility Criteria; Scholarships for Study in a Particular Field; Scholarship Programs With an International Focus; Scholarships for Affiliates; School-Specific and Need-Based Grants

Affiliations:  1: Strasburger & Price LLP.