C.13. Grant Making Information – Advance Approval

(1) In addition to requiring that grants be awarded on an objective and

nondiscriminatory basis, Section 4945(g) requires that Section 4945(d)(3) grants be awarded "pursuant to a procedure approved in advance" by the IRS. To secure such approval, the private foundation must demonstrate the following:

a. Its grant procedure includes an objective and non-discriminatory selection

process (see Treas. Reg. 53.4945-4(b));

b. Its grant procedure is reasonably calculated to result in performance by

grantees of the activities intended to be financed; and

c. It will obtain reports from the grantees to determine whether they have

performed the activities that the grants are intended to finance.

(2) No single procedure or set of procedures is required and variant factual situations

will determine what precautions are appropriate in each case. Treas. Reg. 53.4945-4(c)(1). Nevertheless, a procedure (or set of procedures) must include methods—

a. To supervise the use of scholarships, fellowships, and other types of Section

4945(d)(3) grants,

b. To investigate "jeopardized" or "diverted" grants, and

c. To retain records of scholarships, fellowships and grants made. See Treas.

Regs. 53.4945-4(c)(2), (3), (4), (5) and (6).