Here’s a story—a hypothetical one—what if Mike and Carol Brady established a foundation for their philanthropic giving? As of late, Legal Affairs has seen an increase in inquiries both relating to and from family foundations. As such, we thought it would be ‘groovy’ to highlight some frequently asked questions, while paying homage to our favorite 70s TV family.
What to do when an organization sets up a DAF, but designates a particular individual to make grant recommendations – that was the question a community foundation faced this week. In this case, the advisor wanted to fund a project of a private non-operating foundation; did Expenditure Responsibility need to be exercised?
Providing grants to colleges and universities is a central function of many corporate foundations. Company foundations are often asked to provide support to educational institutions that train potential employees. And as a recent inquiry to Legal Affairs demonstrates, as long as the foundation’s support does not materially aid the company in recruiting or training workers, grants may be made to educational institutions without fear of engaging in any self-dealing prohibitions.
For foundations that offer charitable remainder annuity trusts (CRATs), a new revenue procedure (Rev. Proc. 2016-41) offers a sample provision that may be included in the governing instrument of the trust (CRAT) and provides that the IRS will treat the sample provision as a qualified contingency within the meaning of § 664(f) of the Internal Revenue Code.