Ideally, grantmakers will work with an existing charity or other well-established organization to provide disaster relief. But in the months after a disaster, it is not uncommon to see new charities cropping up in efforts to meet the immense and diverse needs of the affected communities. The problem is that it may take many months before a new organization is officially eligible to receive charitable contributions. Generally, an organization is not considered to be a public charity until it has a determination letter from the IRS stating that its public charity status has been recognized.
Corporate Philanthropy refers to the investments and activities a company voluntarily undertakes to responsibly manage and account for its impact on society. It includes investments of money, donations of products, in-kind services and technical assistance, employee volunteerism, and other business transactions to advance a social cause, issue, or the work of a nonprofit organization. Corporate foundations and corporate giving programs traditionally play a major role in these areas.
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The private foundation executive director was concerned. Members of her board were going to make grants to promote public housing and economic development but none of the groups involved were the typical 501(c)(3)s to which the foundation normally made grants. One possibility seemed to be making a grant to a local government agency, but the agency had no IRS tax-exemption letter. Would the foundation have to exercise expenditure responsibility?
In the aftermath of a natural disaster, corporate grantmakers often wish to address the needs of employees and the community at large. Grantmakers must understand the legal rules that govern disaster grantmaking. Below are the answers to many common questions on providing disaster relief.
Although this information provides the legal context for corporate grantmakers' response to disasters, corporations and their foundations should always review their particular approach with knowledgeable legal counsel.
Why is the qualified disaster designation important?
- What are the administrative/legal requirements for matching gift programs?
- Is there a minimum or maximum to the corporation's or foundation's match?
- Are there any gifts that should not be matched?
- What kind of gifts can the corporation or foundation match?
- What about matching gifts to foreign charities?
Public foundations, community foundations and corporate giving programs may establish a matching gifts program that will match disaster relief gifts made by employees or other donors living in the U.S. or anywhere in the world, provided the grantees are public charities based in the U.S., and gifts are not made from a donor advised fund.
Matching gifts from donor advised funds or private foundations can be done, but grantmakers will have to comply with the rules applicable to these giving vehicles.
Corporate grantmakers regularly serve the broader community through grantmaking, promoting employee volunteerism, and other activities. When may a corporate grantmaking entity focus its charitable efforts on assisting its own employees and their dependents?
The answer to this question depends on two variables: the type of corporate grantmaker offering assistance and the type of assistance offered. This article reviews the framework for determining what type of assistance is permitted and provides links to other more detailed resources on this topic.
For many foundation managers, meeting community, regional, or even global needs is a primary aspect of everyday business. But when disaster strikes, foundations may find the need to quickly provide relief while accurately navigating a new set of grantmaking rules. These guidelines outline the basic legal considerations of a variety of popular giving options for managers of public and private foundations and corporate giving programs.
In international grantmaking, private foundations often make grants to organizations (“Initial Grantees”) that, in turn, re-grant those funds to other non-public charity organizations or individuals (“Secondary Grantees”).