Sample Expenditure Responsibility Grant Agreement
A: If you want to support an organization that is not recognized by the IRS, you can use one of two processes to grant compliance. Expense responsibility grants are typically targeted to a specific project, while the equivalency provision gives you more freedom to support the organization`s overhead and operating costs. Here are the circumstances in which each procedure may be applicable: since it is project-specific, the process of responsibility for expenses must be repeated for each individual grant, even if the last grant was only a few weeks ago. Foundation Source manages this whole process for you, gathering the basic information for your evaluation, structuring the grant agreement, collecting monitoring reports and ensuring that everything is correctly reported in your annual 990 PF return. If you intend to provide repeated grants to a particular organization and believe that, despite its lack of a position with the IRS, it essentially functions as if it were a public charity recognized by the IRS under paragraph 501(c)(3), you may want to obtain an equivalency provision. Determining equivalence is a longer and more complex process than responsibility for expenditures because it compares the organization`s finances and operations to those of a 501(c)(3) public charity recognized by the IRS. However, once you have an equivalency provision, you can give these colleagues unlimited grants with only regular updates to ensure that there have been no major changes to the purpose or structure of the organization. A: Our experts can help you decide which option is best for your specific needs, taking into account the size and timing of the proposed grant, as well as your relationship with the organization. Once the best route is identified, we will facilitate the rest of the process. As long as your grant is for charitable purposes, Foundation Source can help you fund these organizations through the expense responsibility and equivalency determination processes.
Depending on the circumstances, either of these processes may apply to donations to organizations that are not classified as public charities by the IRS, including: Your private foundation can grant to almost any organization that does community service, no matter where it is located. Example: A family amusement park for children and adults with special needs is a place where they can enjoy outdoor recreation, an extremely accessible carousel, train rides with wheelchair accessible cars, Braille signage, and rest areas for service animals. all made possible by a private corporate foundation, which could grant another private foundation for the use of these procedures. The exercise of responsibility for expenses may include one or more of the following: Special rules for grants from foreign private foundations. Failure by a foreign private foundation to comply with grant restrictions is not an act or omission that constitutes a prohibited transaction under paragraph 4948(c) of the Code. Some grants to foreign organizations. Grants to foreign organizations that are not organizations referred to in paragraph 509(a)(1), (2 or (3) are subject to the same restrictions on the use of the grant as domestic private foundations. These restrictions may be appropriately formulated under a foreign law or practice and are generally considered sufficient if an affidavit or expert opinion is obtained from a lawyer (the grantor or beneficiary) demonstrating that the agreement imposes the same restrictions on the use of the grant under a foreign law or practice as a domestic private foundation.
Many foundations find incredible programs and charities that they want to support, but are reluctant to provide grants because the organization is not recognized as a 501(c)(3) public charity. They are concerned not only about how to transfer the funds to these beneficiaries, but also about how their funds will be used after the cheque is cashed. The expense responsibility process allows your foundation to fund a project managed by an organization that does not have a 501(c)(3) designation as a public charity. It ensures that the organization is able and willing to use grant funds for charitable causes Responsibility for expenses means that the foundation makes all reasonable efforts and establishes appropriate procedures: Example: The local Foreign War Veterans (VFW) position is engaged in a significant commitment to the families of veterans of the war in Iraq and Afghanistan. A private foundation could help by funding the various assistance programs of that local VFW position, even if the VFW is not a 501(c)(3) organization. Civic associations, veterans` groups, business leagues, and other types of tax-exempt organizations often provide valuable community service, even if they are not classified by the IRS as public charities 501(c)(3). Companies often run effective charitable programs that can advance your foundation`s goals. .