Home      Login

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 requirement that advance approval be obtained results in a regular stream of rulings that describe different scholarship and grant programs and shed light on the IRS’s approach to evaluating these programs. The beginning of the 2020-2021 academic year provides a timely opportunity to examine the foundation scholarship and grant programs that have been released over the past year. These rulings reflect the variety of programs and methods that foundations can use to advance their own exempt purposes and may inspire other foundations to develop scholarship programs of their own. Includes letter rulings on programs to benefit specific populations; programs focused on a particular field of study; programs that impose a service requirement; grants to improve recipients’ skills; programs connected to other organizations; and programs with innovative outreach, selection, and administration.

Keywords: Private letter rulings; qualified scholarship and grant programs

Affiliations:  1: Clark Hill PLC.