Grants to Non-Charities

In-Depth knowledge on Grants to Non-Charities

Making grants to government entities is much easier than most foundation boards realize. Indeed foundations all across the country have made grants to school boards, government commissions and federal agencies. The tax code allows private and community foundations, as well as corporate giving programs, to make grants directly to government entities almost as if they were public charities. At a time when many grantmakers are interested in working with government to improve community welfare, knowing the rules can help maximize results.

Legal issues arise when a private foundation makes a grant to an Initial Grantee that is not a 501(c)(3) organization or that re-grants the Foundation's funds to a Secondary Grantee that is not a 501(c)(3) organization. Most of those issues center around IRS expenditure responsibility rules: specifically, which organization—the private foundation or the Initial Grantee—is responsible for adhering to those rules, if any.