Exempt Organizations Technical Guide›TG 62: Excise Taxes on Taxable Expenditures – IRC Section 4945›Table of Contents
D. Grants to Organizations Section 4945(d)(4)
Publication 5590 — Exempt Organizations Technical Guide TG 62: Excise Taxes on Taxable Expenditures under IRC 4945 · 2026-10-03 edition · updated 2026-10-04 · United States
42
(1) Before the Tax Reform Act of 1969, many private foundations awarded grants to
organizations, including other private foundations, without taking any precautions to ensure the proper use of funds or to recover funds in the event of misuse. In many cases, grantee organizations had diverted funds designated for charitable purposes to nonexempt purposes. Congress enacted Section 4945(d)(4) to curb these abuses.
(2) Under Section 4945(d)(4) the term " taxable expenditure" includes any amount
that a private foundation pays or incurs as a grant to an organization other than a qualifying public charity described below unless the grantor foundation exercises "expenditure responsibility" with respect to the grants. The requirements of expenditure responsibility are described in Section 4945(h) and are discussed below.
Get a plain-English answer with a citation back to this text.
Ask AI about this code