C. Section 4945(d)(3) Grants to Individuals

(1) Section 4945(d)(3) provides that a taxable expenditure includes any amount paid

or incurred by a private foundation as a grant to an individual for travel, study, or similar purposes by such individual, unless such grant satisfies the requirements of Section 4945(g).

(2) Congress enacted Section 4945(d)(3) to curb the misuse of grants by some

private foundations. Specifically, grants made to individuals purportedly for educational purposes were in fact used to serve private interests.

Example: Some private foundations awarded grants to enable the grantees to take vacations abroad, to have paid interludes between jobs and to prepare materials furthering specific political viewpoints.

(3) Simply stated, Section 4945(d)(3) provides that all grants awarded by private

foundations to individuals for travel, study, or similar purposes constitute taxable expenditures unless Section 4945(g) applies to such grants. Two underlying issues arise from Section 4945(d)(3).

a. Whether the expenditure constitutes a "grant" within the meaning of Section

4945(d)(3).

b. Whether the grant, if otherwise described in Section 4945(d)(3), falls within

Section 4945(g).