IRC section 4945 includes a list of prohibited expenditures. It also provides instructions for how private foundations may make certain charitable expenditures which are not to public charities. As long as private foundations follow the proscribed guidelines, the charitable distributions are not treated as taxable distributions. Foundations use these provisions to make international grants, payments to individuals, stimulate invention through prizes and economic and disaster recovery through program related investments.
Determine how foundations can avoid making taxable expenditures
Understand the exceptions which allow for greater funding options for foundations beyond public charities if a foundation is willing to undertake additional inquiry and oversight of expended funds
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