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Private Foundations: Making Nontraditional and Foreign Grants in Compliance With IRS Regulations

Making Individual Grants Without and With Preapproval, Meeting Equivalency Tests and Expenditure Responsibility for Foreign Grants

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, August 4, 2020

Recorded event now available

This course will discuss IRS guidelines and best practices for private foundations (PFs) making distributions to foreign charities, individuals, and other unique grants. Our panel of nonprofit experts will explain how to meet equivalency test requirements for foreign donations, structure individual grants, and document compliance to stand up to IRS scrutiny.

Description

PFs are subject to various regulatory requirements and excise taxes in addition to those imposed on public charities. Structured properly, a PF can make foreign grants, grants to individuals, and other unique grants. Failing to structure these grants properly can expose the organization to sanctions and jeopardize the deductibility of contributions.

Unrestricted donations to domestic public charities or PFs are deductible (barring certain AGI limitations); the same donation made to a foreign charity generally is not. A PF, however, can contribute to a foreign charity if it meets an equivalency test or exercises expenditure responsibility. The much more cumbersome expenditure responsibility benchmark requires that the PF monitor the organization's use of the funds, and the grantee provide complete accountability reports.

On the other hand, Revenue Procedure 2017-53 provides the steps taken by a PF to make a "good faith determination" that a foreign grantee qualifies as a qualifying public charity to meet the less burdensome equivalency test. Contributions, and the desire to contribute, to international organizations continues to increase dramatically. Additionally, PFs are charged with spending at least of its assets annually for charitable purposes; practitioners working with these foundations need to understand these rules to ensure these foundations make compliant foreign grants.

Listen as our panel of nonprofit experts explains requirements for grants to foreign organizations, individuals, other unique gifts, and best practices for meeting and documenting compliance with IRS requirements.

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Outline

  1. Grants to individuals
  2. Grants to foreign organizations
    1. Expenditure responsibility
    2. Equivalency test
  3. Other unique grants
  4. Sanctions and penalties
  5. Best practices for compliance

Benefits

The panel will cover these and other critical issues:

  • Meeting the expenditure responsibility requirements for foreign grants
  • Complying with Revenue Procedure 2017-53 to meet the equivalency test
  • Qualifying for advance IRA approval for individual gifts under IRC Section 4945(g)
  • Documenting compliance for individual grants made without advance approval

Faculty

Czerniawski, Magdalena
Magdalena M. Czerniawski, CPA, MBA
Managing Director
CBIZ Marks Paneth

Ms. Czerniawski is a member of the firm’s Nonprofit, Government & Healthcare Group. With over 15 years of...  |  Read More

Lyons, Robert
Robert Lyons, CPA, MST
Tax Director
Marks Paneth

Mr. Lyons is a Tax Director, Exempt Organizations in the Nonprofit, Government & Healthcare Group at Marks Paneth...  |  Read More