Generally, there is no legal restriction against making grants to churches, synagogues, mosques or other religious institutions. But there are some things foundations interested in such grantmaking should know.
Oftentimes, grantmakers can rely on the rules applicable to private foundations or even their state’s nonprofit corporation law when seeking answers to thorny grantmaking questions. But what should a charity do when both the tax code and state statutes are silent on the matter? In such an instance, it is important that your foundation craft grantmaking policies to address these unanswered areas. From donor-initiated fundraising to granting to government to the types of gifts you accept, this section can help.
In-Depth knowledge on Grantmaking Policies
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.
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?
“If I create a fund at the community foundation, can my investment manager still manage the funds?” You may have already come across a donor that asked this question. Such a donor is essentially requesting that the fund they create be invested outside of the foundation’s investment pool(s). While there are cases where the answer must be “no” (e.g., donor wants the investment firm she owns to manage the assets), there are also cases where the answer should be “no.” A strong policy will guide the community foundation in those cases where the answer may be “yes.”
Grantmakers searching for more detailed information about the charitable status of their potential grantees may find the answers they need in the IRS’ Select Check tool.