Refugee and immigrant scholarship procedures received approval

Plain-English summary

A private foundation proposed nonrenewable scholarships for current or former refugee and immigrant clients of a charitable organization and members of their families. Applicants had to fall within a redacted age range, enroll at an eligible accredited school, and submit financial information, transcripts, and an essay. Staff and officers would select recipients based on financial need, academic merit, and the essay, while relatives of selection committee members were ineligible. Scholarship checks would be paid directly to the school after proof of enrollment. The IRS approved the procedures under section 4945(g)(1), so qualifying awards would not be taxable expenditures and could be excluded by recipients under section 117.

Ruling snapshot

• Question: Did the scholarship program for refugee and immigrant clients and their families satisfy section 4945(g)(1)?
• Outcome: approved, assuming the program is conducted as represented
• Key authorities: IRC §§ 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

Employer Identification Number:
Release Number: 201920013
Release Date: 5/17/2019 Contact person - ID number:
Date: February 22, 2019

Contact telephone number:

LEGEND:

B = Name UIL: 4945.04-04
C = Age Range
D = Number

x dollars = 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 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 provided in Code Section 117(b)).

Description of your request
Your letter indicates you will operate a scholarship program.

The purpose of your program is to award scholarships to current or former B refugee or
immigrant clients or members of their family to attend an accredited educational
institution including private high schools, colleges, universities, and vocational training
schools. B is a charitable organization whose mission is to contribute to the well-being of

Letter 4792 (10-2012)
Catalog Number 58263T

the local community by creating and implementing programs that help those born outside
the United States.

To be eligible, an applicant must:

• Be acurrent or former B refugee or immigrant client or a member of such family;
• Be in the range of C years old as of the date of their application;
• Be enrolled at an eligible school.

You will publicize the availability of your scholarships on B’s website as well as
throughout prominent places in B’s facility. Pertinent information including the availability
of the awards, the application procedures and applicable deadlines will also be provided
to B’s employees, volunteers, interns and board members. Applicants must submit an
application with required attachments including financial information, transcripts, and an
essay discussing their goals and future aspirations.

Currently, no more than D grants per year for an amount not to exceed x dollars will be
awarded, but this may increase as your funding increases. The scholarships are
nonrenewable and will not be extended.

Members of B’s staff and officers will evaluate and select the recipients based on
financial need, academic merit and a written essay. Relatives of members of the
selection committee are not eligible for scholarships.

Once the recipient is notified, they must provide you proof of enrollment to an eligible
school. Upon receipt of such proof of enrollment, the scholarship check will be made
payable to the school for the benefit of the recipient. Schools are to apply the funds for
the credit of the individual provided the individual is in good standing with the school. No
other follow-up reporting is required either by the school or the individual.

You represent that you will maintain the following: (1) all records relating to individual
grants including information obtained to evaluate grantees, (2) identify whether a grantee
is a disqualified person, (3) establish the amount and purpose of each grant, and (4)
establish that you undertook the supervision and investigation of grants described above.

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 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). .

Letter 4792 (10-2012)
Catalog Number 58263T

• 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.

The effective date of this ruling is March 26, 2018.

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

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

Letter 4792 (10-2012)
Catalog Number 58263T