Foundation's Martial Arts Grants Won't Be Taxable

Contact person - ID number: * * *

You asked for advance approval of your educational grant procedures under Internal Revenue Code section 4945(g)(3). This approval is required because you are a private foundation that is exempt from federal income tax.

You will make the availability of grants known to the community through solicitation to various institutions that work in the martial arts, Tae Kwon Do and anti-violence. In addition you will promote the availability on social media, your corporate website, instructional publications, and other forms of communications, including but not limited to direct mail and internet based resources.

Grants will be for Tae Kwon Do, martial arts, and anti-violence students, instructors, educators, and leaders. Applicants will be required to submit an application form and supporting materials. Criteria for the grants may include, but are not limited to:

• Prior performance in Tae Kwon Do, marital arts, and anti-violence programs and activities

• Recommendations from instructors, leaders, or others who have knowledge of the applicant's capabilities

• Additional information regarding an applicant's interest and relevant experiences with Tae Kwon Do, martial arts, and anti-violence programs

• Financial need

• Conclusions which the selection committee may draw as to the applicant's motivation, character, ability, or potential

Your selection committee will consist of at least three members and may include members of your board. The selection committee will select grant recipients from the pool of applicants on an objective and nondiscriminatory basis. Grants may not be awarded to any member of the selection committee, any family member of a member of the selection committee, or any other disqualified person as defined in Section 4946(a) of the Internal Revenue Code.

You will keep information pertaining to unsuccessful grant applicants along with the information on successful applicants. You will retain the following records for all of your grants:

• A list of all applicants (including any relationship of an applicant to you or to one of your directors or employees)

• All information obtained to evaluate the qualifications of applicants

• The purpose and amount of each grant awarded

• Reports, receipts, and other documentation provided by grant recipients showing the use of the grant funds

• Any additional information you obtain in complying with the procedures

• The foundation awards the grant on an objective and nondiscriminatory basis.

• The IRS approves in advance the procedure for awarding the grant.

• The grant is:

• • A scholarship or fellowship subject to section 117(a) and is to be used for study at an educational organization described in section 170(b)(1)(A)(ii); or

  • A prize or award subject to the provisions of section 74(b), if the recipient of the prize or award is selected from the general public; or

  • To achieve a specific objective; produce a report or similar product; or improve or enhance a literary, artistic, musical, scientific, teaching, or other similar skill or talent of the recipient.

• The grant procedure includes an objective and nondiscriminatory selection process.

• The grant procedure results in the recipients performing the activities the grants were intended to finance.

• The foundation plans to obtain reports to determine whether the recipients have performed the activities that the grants were intended to finance.

• This determination covers only the grant program described above. This approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request.

• This determination applies only to you. It may not be cited as precedent.

• You cannot rely on the conclusions in this letter if the facts you provided have changed substantially. You must report any significant changes in your program to the Cincinnati Office of Exempt Organizations at:

•  

  Internal Revenue Service

   

  Exempt Organizations Determinations

   

  P.O. Box 2508

   

  Cincinnati, OH 45201

   

• You cannot make grants to your creators, officers, directors, trustees, foundation managers, or members of selection committees or their relatives.

• All funds distributed to individuals must be made on a charitable basis and must further the purposes of your organization. You cannot award grants for a purpose that is inconsistent with Code section 170(c)(2)(B).

• You should keep adequate records and case histories so that you can substantiate your grant distributions with the IRS if necessary.

If you have any questions, please contact the person listed at the top of this letter.