Jewish education scholarship procedures approved

Plain-English summary

A private foundation proposed a scholarship program to help converts to Judaism take college-level courses in Hebrew and Jewish studies. The awards would cover half of tuition and fees for up to four courses over two years, subject to application criteria, review by an education committee, and academic progress requirements. The foundation would pay grants directly to educational institutions and exclude foundation insiders and selection committee members from eligibility. The IRS approved the scholarship procedures under § 4945(g)(1), so expenditures made under the approved procedures would not be taxable expenditures. It also stated that recipients would not be taxed on awards used for qualified tuition and related expenses, subject to § 117(b).

Ruling snapshot

• Question: Did the foundation's scholarship procedures satisfy the advance-approval requirements for grants to individuals?
• Outcome: approved
• Key authorities: IRC §§ 117, 170(b)(1)(A)(ii), and 4945(g)

Full text (IRS public release)

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

Employer Identification Number:

Date: August 16, 2016
Contact person - ID number:

Number: 201646008 Contact telephone number:
Release Date: 11/10/2016

LEGEND UIL: 4945.04-04

G = University
H = College

J = University
K = University
L = Temple

M = Name

N = Academy
y = Number

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 won't 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 provide in Code section 117(b)).

Letter 4792 (10-2012)
Catalog Number 58263T


Description of your request
Your letter indicates you will operate a scholarship program for Jewish education for
converts to Judaism.

The purpose of the scholarship program is to help the converts integrate into their new
community of faith through the study of language, culture, history, society, and religious
thought. The scholarship amount is fifty (50) percent of tuition and fees and the award
will be paid for up to four (4) college-level courses taken over two years. The number of
the awards is y in a given year.

The courses may be taken at G, H, J, and K. The Education Committee may approve
courses at other colleges and universities with strong Judaic Studies programs. The
Education Committee is based in L and directed by M. If the eligible candidate is not
already at intermediate level in Hebrew, he must take two semesters of Hebrew as his
first two courses before signing up for other courses in Jewish Studies. On-line classes
like Jewish Education and Jewish Communal Service are excluded.

The applicant must meet the following criteria:

a. Be a convert (whose conversion took place up to 20 years ago) to Judaism.

b. Must have graduated from a secondary school with a grade point average of at least
“B”.

c. For the first year of the program, is a graduate of N and also a member of the
synagogues participating in N.

d. After the first year of the program, is a convert who is a member of other conservative
synagogues, as well as Orthodox, Reconstructionist and reform synagogues, and
unaffiliated converts.

The applicants must submit (a) an application form, (b) a personal statement (400-500
words), (c) a plan of study, and (d) the contact information of the sponsoring Rabbi (who
can provide a letter of support).

The scholarship program will be publicized through distribution of flyers and
advertisements in newspapers and on your website. It will also be presented at religious
gatherings and scheduled prayers.

In order to renew his grant, the applicant must have achieved a grade point average of
“B” in the previous course which was paid for by the scholarship fund.

The scholarship grants will be paid directly to the educational institution. Should an
individual fail to enroll or is not in good standing, the money will be returned to you.
Should a violation of the educational institution's standard occur after the scholarship
grant has been awarded, the Education Committee will decline to consider that individual
for future grants. The grade will be reported to the Committee via an official report from
the institution or from a conversation with the Office of Registrar personnel.

The Education Committee must be familiar with Judaic studies. The Committee, at all
times, must have at least three (3) university faculty members. No member of the
Education Committee, officer or director, or substantial contributor will be eligible for
scholarship grants.

Letter 4792 (10-2012)
Catalog Number 58263T


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 must report any significant changes to 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 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.

Letter 4792 (10-2012)
Catalog Number 58263T


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

Sincerely,

Jeffrey I. Cooper

Director, Exempt Organizations
Rulings and Agreements

Letter 4792 (10-2012)
Catalog Number 58263T