C.2. Grants that — Publication 5590

(1) Treas. Reg. 53.4945-4(a)(3)(i) provides that grants to individuals for purposes

other than for travel, study or similar purposes are not taxable expenditures under Section 4945(d)(3) even if the requirements of Section 4945(g) are not met.

Example: If a private foundation makes grants to indigent individuals to enable them to purchase furniture, such grants are not taxable expenditures within the meaning of Section 4945(d)(3) even if the requirements of Section 4945(g) are not met. However, such grants must still meet the requirements of Sections 4945(d)(5) and 170(c)(2)(B) to not be treated as taxable expenditures.

(2) A type of grant that does not fall within Section 4945(d)(3) is a grant that does not

finance any future activities of a grantee.

Example: In Rev. Rul. 75-393, 1975-2 C.B. 251, a private foundation made grants to individuals in recognition of past literary works. They were not made to

finance any activities and no conditions were imposed on the manner in which it could be expended by the grantee. The IRS concluded the grants were made not for study, travel or similar purpose, and, thus, do not fall within Section 4945(d)(3).

(3) Similar conclusions are reached in Rev. Rul. 77-380 (situation 1), 1977-2 C.B.

419 and Rev. Rul. 76-460, 1976-2 C.B. 371. In the former, a private foundation made a grant each year to an individual whose work represented the best example of investigative reporting. Since the grant was awarded for recognition of past achievement and had no conditions for its use, it was not a Section 4945(d)(3) grant and not otherwise a taxable expenditure. In the latter, a private foundation made grants to winners of a craft contest, and there were no restrictions for the use of the grants. The IRS concluded that they were not grants for study or similar purpose but furthered educational purposes and thus were not taxable expenditures.

(4) However, in Rev. Rul. 76-461, 1976-2 C.B. 372, the IRS concluded that a private

foundation’s grant to a high school senior for winning a science fair contest was a Section 4945(d)(3) grant. Although the grant was made in recognition of a past achievement, the grant was conditioned upon the student attending college. Since the grant was intended to finance future educational activities of the grantee and conditions were imposed on the way the award could be used, it was a grant described in Section 4945(d)(3) and subject to the requirements thereof. See also situation 2 (in which an award for travel was treated as a Section 4945(g)(2) grant) and situation 3 (in which an award for study was treated as an Section 4945(g)(1) grant) of Rev. Rul. 77-380, 1977-2 C.B. 419.