Guidance Issued for Private Foundations with Foreign Grantees

New guidance for private foundations from the IRS addresses treatment of foreign grantees.  The groups may wish to treat grants to foreign grantees as qualifying distributions that satisfy the minimum distribution requirements rather than as expenditures requiring expenditure responsibility.

If a private foundation makes a “good faith determination” that a foreign grantee qualifies as a qualifying public charity, as defined in Revenue Procedure 2017-53, the grant will generally be a qualifying distribution that does not require expenditure responsibility in order to not be a taxable expenditure.  A major development is that the new procedure supersedes Rev. Proc. 92-94, which allowed a private foundation to avoid expenditure responsibility if it had an equivalency determination, such as a grantee affidavit.

Post by: Jillian Mastroianni