Environmental leadership and student project grants were approved

Plain-English summary

A private foundation proposed two educational grant programs supporting environmental conservation and sustainability. One was a year-long fellowship for young environmental leaders, with awards based on project scope, local living costs, leadership, feasibility, impact, systems change, and equity. The other allowed students in an existing program to pitch environmental ideas or projects, with scores for community engagement, impact, creativity, and presentation. Independent panels would make objective and nondiscriminatory selections, and the foundation would require reports and investigate and recover diverted funds. The IRS approved both programs under Section 4945(g)(3), so payments made under the approved procedures would not be taxable expenditures.

Ruling snapshot

• Question: Did the foundation's procedures qualify for advance approval for two environmental educational-grant programs?
• Outcome: approved
• Key authorities: IRC §§ 74(b), 117, 170, and 4945(g)(3); Treas. Reg. § 53.4945-4(c)

Full text (IRS public release)

Department of the Treasury Internal Date:
Revenue Service 12/04/2023
Tax Exempt and Government Entities
P.O. Box 2508

Cincinnati, OH 4520

Taxpayer ID number:

Person to contact:

Release Number: 202409022
Release Date: 3/1/2024

LEGEND UIL: 4945.04.04
B = Program Name

C = Program Name
D = Number Range
E = Number Range
F = Program Name
y dollars = dollar range
z dollars = dollar range

Dear

You asked for advance approval of your educational grant procedures under Internal Revenue Code (IRC)
Section 4945(g)(3).

This approval is required because IRC Section 4945 provides for the imposition of taxes on each taxable
expenditure of a private foundation. IRC Section 4945(d)(3) provides that the term "taxable expenditure"
includes any amount paid or incurred by a private foundation as a grant to an individual for travel, study, or

similar purposes by the individual, unless the grant satisfies the advance approval requirement of IRC Section
4945(g).

Our determination

We approved your procedures for awarding educational grants. Based on the information you submitted,
and assuming you will conduct your program as proposed, we determined that your procedures for awarding
educational grants meet the requirements of IRC Section 4945(g)(3). As a result, expenditures you make
under these procedures won't be taxable.

Description of your request
Your letter indicates you will operate two grant programs called Program B and Program C. Both programs will
further your exempt purpose by promoting environmental conservation and sustainability.

Program B:

Program B is a year-long program, like a fellowship, that will support passionate, young leaders who are vital
agents of change and innovators of solutions for the planet. It will help support and develop young
environmental champions by helping recipients to learn, experiment, and grow as leaders to advance their
positive impact on the planet now and for decades to come.

Letter 4792 (Rev. 1-2022)
Catalog Number 58263T

You plan to award between D grants each year in the amount of y dollars. Grants will be awarded one time and
are not renewable. Grants will be based on the size and scope of the recipient's particular project and financial
need based on the cost of living in the recipient's particular geographic locale.

You will publicize the grants on your website and through climate, environmental, and grassroots organizations
who collaborate with you. Eligibility is limited to individuals who are roughly between the ages of and

. Interested and eligible individuals will complete applications to apply for your grants. Your application
will contain sections for personal information, a resume, personal journey, project details and scope, and wrap
up questions.

Your selection process is heavily weighted towards the characteristics of servant leadership, passion, business
acumen, learning mindset, and diversity. Moreover, you will also consider design/feasibility, impact, systems
change, locality, and equity-mindedness. The selection committee will consist of an independent panel of
individuals and judges. Their decision will be made on an objective and non-discriminatory basis.

Program C:

You aim to provide students who participate in your F with an opportunity to pitch an idea, concept, or project
developed during their participation in F to potentially continue their work.

You plan to award between E grants each year in the amount of z dollars. Grants will be awarded one time and
are not renewable. You will publicize the grants through your website and by direct communication to the
teachers, facilitators, and schools who are enrolled/participate in your F

Your program is open to all students participating in your F. Participants may apply individually or as a team.
Interested and eligible individuals/teams will submit pitch videos to apply for your grants. The pitch videos will
be ideas, concepts, or projects in the areas of environmental justice, direct harm reduction to the climate,
changing human behavior, and messaging.

Your selection process will be evaluated by scoring the categories of community engagement, impact (realized
or potential), novel/creative idea, and presentation with each category being scored between 1 (being the
lowest) and 4 (being the highest). The best overall scores will be selected. In the event of a tie, preference is
given to the highest scores in the categories of community engagement and impact (realized or potential). The
selection committee will consist of an independent panel of individuals and judges. Their decision will be made
on an objective and non-discriminatory basis.

You represent that you will complete the following:

* Arrange to receive and review grantee reports annually and upon completion of the purpose for which the
grant was awarded,

* Investigate diversion of funds from their intended purposes,

* Take all reasonable and appropriate steps to recover the 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 diversion from occurring.

Letter 4792 (Rev. 1-2022)
Catalog Number 58263T

You also represent that you will:

* Maintain all records relating to individual grants including information obtained to evaluate grantees,
* Identify a grantee is a disqualified person,
* Establish the amount and purpose of each grant, and

* Establish that you undertook the supervision and investigation of grants described above.

Basis for our determination

IRC Section 4945 imposes excise taxes on the taxable expenditures of private foundations. 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 IRC Section 4945(g) is not a taxable expenditure.

* The foundation awards the grants 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 IRC Section 117(a) and is to be used for study at an educational
organization described in IRC Section 170(b)(1)(A)(ii); or

- A prize or award subject to the provisions of IRC Section 74(b), if the recipient of the prize or award is
selected from the general public; or

- To achieve a specific objective; produce a report or similar product; or improve or enhance a literary,
artistic, musical, scientific, teaching, or other similar skill or talent of the recipient.

To receive approval of its educational grant procedures, Treasury Regulation Section 53.4945-4(c)(1) requires
that a private foundation show:

* The grant procedure includes an objective and nondiscriminatory selection process.
* The grant procedure results in the recipients performing the activities the grants were intended to finance.

* The foundation plans to obtain reports to determine whether the recipients have performed the activities that
the grants were intended to finance.

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 IRS at:
Internal Revenue Service
Exempt Organizations Determinations
TE/GE Stop 31A Team 105
P.O. Box 12192
Covington, KY 41012-0192

* You can't 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 IRC Section 170(c)(2)(B).

Letter 4792 (Rev. 1-2022)
Catalog Number 58263T

* You should keep adequate records and case histories so that you can substantiate your grant
distributions with the IRS if necessary.

We'll make this determination letter available for public inspection after deleting personally identifiable
information, as required by IRC Section 6110. We've enclosed Letter 437, Notice of Intention to Disclose -
Rulings, and a copy of the letter that shows our proposed deletions.

* If you disagree with our proposed deletions, follow the instructions in the Letter 437 on how to notify us.
* If you agree with our deletions, you don't need to take any further action.

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

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

Enclosures:
Letter 437

Letter 4792 (Rev. 1-2022)
Catalog Number 58263T