Economic development grants raise all sorts of intriguing legal issues. May a charity participate with non-charitable and even for-profit companies in a development project it does not control? What sorts of people and institutions are appropriate recipients of economic development assistance? Where is the line between charitable assistance and private benefit? The IRS has provided substantial guidance in this area and this chapter will review the available guidance and discuss how philanthropic organizations can support economic development in a charitable and legal way. This chapter will examine topics such as charitable purpose, forms of assistance and include case studies where appropriate.
This chapter is divided into three different parts:
Charitable Organizations and Economic Development: A Legal Overview
Part One of this chapter provides a legal overview, reviews much of the available IRS guidance, and examines the charitable purposes that can be achieved through economic development. It also discusses private benefit and private inurement and how to avoid these pitfalls.
Forms of Economic Development Assistance
Part Two discusses the various forms of economic development assistance including partnerships with government entities and other tax exempt organizations.
Additional Resources and Examples
Part Three provides a list of additional resources and an economic development checklist.