Giving Grants to Individuals
There is a great deal of talk about all the innovative entrepreneurial projects coming out of our Jewish world. Many of these projects are being started on a shoe-string by young cash-strapped innovators. Thousands of dollars are required to form a 501(c)3 or an Amuta in Israel. In many cases, these organizations are only seeking small amounts. I have heard foundations and communal organizations say, we can’t give so and so a grant, they’re an individual.
Take a read through these comments; but in any case, obtain your own legal advice on the subject.
Even without trying, foundations can violate the law and get into trouble if they are not scrupulous in disbursing funds. Two areas that frequently cause trouble are grants to individuals and grants to organizations that are not charities.
Kelly Shipp Simone, senior staff attorney for the Council on Foundations, during a recent conference offered a look at the details of foundation grants to individuals and to non-charities.
Both types of grants are allowed, but they must meet certain very strict criteria. The following items are of note for grants to individuals:
- They must further charitable purposes.
- No grants may be given to disqualified persons.
- The most common grants to individuals are study or travel grants. They must be in the charitable class, objective and nondiscriminatory and meet pre-approval of process.
- Disaster relief grants to alleviate poverty do not require pre-approval.
- An organization considering a grant to an individual should check its governing documents.
Regarding grants to organizations that are not charities:
- A foundation can make a grant to an organization that is not a charity as long as the grant is for charitable purposes.
- The safest grants are to IRS-recognized organizations.
- “Expenditure responsibility” requires a pre-grant inquiry, a written agreement, funds held separately by the grantee, regular reports from the grantee and summary status on Form 990-PF.
courtesy The NonProfit Times