Computer-programming scholarship procedures approved

Plain-English summary

A private foundation proposed scholarships for students taking accelerated computer-programming immersion courses. The grants would cover portions of tuition, room, and board, with recipients selected through an application and possible interview. The foundation would prefer qualified women, members of groups underrepresented in programming, and students attending institutions in a specified state, while maintaining an equal-opportunity policy. The IRS approved the award procedures under section 4945(g)(1), so expenditures made under those procedures would not be taxable expenditures. Awards used for qualified tuition and related expenses also could be excluded from recipients' income under section 117, subject to that section's limitations.

Ruling snapshot

• Question: Whether the foundation's procedures for awarding computer-programming scholarships met section 4945(g)(1)
• Outcome: Approved
• Key authorities: I.R.C. §§ 117, 170(b)(1)(A)(ii), 4945(g)(1)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
P.O. Box 2508
Cincinnati, OH 45201

Release Number: 201539035
Release Date: 9/25/2015 Employer Identification Number:
Date: June 25, 2015

Contact person - ID number:

Contact telephone number:

LEGEND UIL: 4945.04-04

X= State

r= Number

s= Number

t dollars= Amount
u dollars= Amount
v= Amount

Dear

You asked for advance approval of your scholarship grant procedures under
Internal Revenue Code section 4945(g). This approval is required because you are
a private foundation that is exempt from federal income tax. You requested
approval of your scholarship program to fund the education of certain qualifying
students.

Our determination

We approved your procedures for awarding scholarships. Based on the information
you submitted, and assuming you will conduct your program as proposed, we
determined that your procedures for awarding scholarships meet the requirements
of Code section 4945(g)(1). As a result, expenditures you make under these
procedures will not be taxable.

Also, awards made under these procedures are scholarship or fellowship grants and are
not taxable to the recipients if they use them for qualified tuition and related expenses
(subject to the limitations provided in Code section 117(b)).

Description of your request

You are operating a scholarship program to provide educational grants to qualified
individuals who plan to enroll in accelerated computer programing courses to be used for
tuition, room and board. Your emphasis is on providing scholarships for immersion
classes because your founder has a belief that as when learning foreign languages,

Letter 4792 (10-2012)
Catalog Number 58263T

immersion learning is a superior way to educate students; it results in deeper learning
because students focus more intently during an intense accelerated session with minimal
distractions. Your scholarship awards cover up to r% of the cost of tuition and up to s%
for room and board. Your scholarship is not renewable but applicants may reapply for
scholarships. The number of grants made annually will be determined by the availability
of funds and the number of eligible applicants. Your expectation is to award in the range
of v grants a year. Scholarships will be awarded in the range of u dollars depending on
the recipient's individual circumstances and need. The original scholarship pool size will
be t dollars.

You will publicize your program on your website, social media, at schools through
guidance counselors and academic advisors, as well as through print media and
networking groups. You will also publicize your program to companies via training, and
through human resource departments.

Applicants must be enrolled in or enrolling in an accelerated computer programming
course; moreover, applicants must complete and submit an application providing you
demographics, and specifics about their background in programing. The application
process may also include a short, informal phone interview. Applications will be accepted
on a rolling basis and incomplete applications will not be considered.

A selection committee made up of your founder and three others will select the
candidates. The committee may be modified in the future to best meet the needs of your
program. You will not award scholarships to relatives of members of the selection
committee, or of your officers, directors, or substantial contributors.

You understand that certain demographics are underrepresented in the computer
programming field and you hope to encourage persons from those groups to enroll in
courses in that field. Preference will be given to qualified students who are female or who
are part of a minority culture within the programming field. Additionally, students who will
attend institutions in X will be given preference.

Not all applications will be funded. If the selection committee feels that a student is not
ready to be successful in accelerated computer programming courses based upon their
application and interview, the application will be denied. A student whose application has
been denied may reapply at a later date, if they are able to demonstrate that they have
prepared for and are ready for accelerated learning in a computer programming course.

You will not discriminate based upon race, color, religion, creed, national origin, ancestry,
disability, gender, sexual orientation, or age. You will follow procedures that will ensure
equal opportunity for all people without regard to race, color, religion, creed, national
origin, gender, sexual orientation, age, ancestry, marital status, disability, veteran or draft
status; you will also make reasonable accommodations wherever necessary for all
provided that the individual is otherwise qualified to safely perform the duties and
assignments and provided that any accommodations made do not require significant
difficulty or expense.

Letter 4792 (10-2012)
Catalog Number 58263T

You will pay the funds directly to the student who will then make payment to the school of
choice. Scholarship recipients must agree to fill out the Post Scholarship Report within
two weeks of completion of their course. You will maintain case histories showing
recipients of your scholarships including names, addresses, purposes of awards, amount
of each grant and manner of selection.

You will investigate any diversions of funds from their intended purposes, and take all
reasonable and appropriate steps to recover diverted funds and ensure other grant funds
held by a grantee are used for their intended purposes and withhold further payments to
grantees until you obtain grantees' assurances that future diversions will not occur and
that grantees will take extraordinary precautions to prevent future diversions from
occurring.

Basis for our determination

The law imposes certain excise taxes on the taxable expenditures of private foundations
(Code section 4945). A taxable expenditure is any amount a private foundation pays as a
grant to an individual for travel, study, or other similar purposes. However, a grant that
meets all of the following requirements of Code section 4945(g) is not a taxable
expenditure.

• 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 the provisions of Code section
117(a).

• The grant is to be used for study at an educational organization described in Code
section 170(b) (1) (A) (ii).

Other conditions that apply to this determination
• This determination only covers 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 a precedent.

• You cannot rely on the conclusions in this letter if the facts you provided have
changed substantially. You may report any significant changes to your program by
completing Form 8940 and sending it to the Cincinnati Office of Exempt
Organizations at:

Internal Revenue Service

Exempt Organizations Determinations
P.O. Box 2508

Cincinnati, OH 45201

Letter 4792 (10-2012)
Catalog Number 58263T

• You cannot award 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 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.

Please keep a copy of this letter in your records.
If you have questions, please contact the person listed at the top of this letter.

Sincerely,

Director, Exempt Organizations

Letter 4792 (10-2012)
Catalog Number 58263T