Artist residency grant procedures receive advance approval

Plain-English summary

A private foundation requested advance approval for grants supporting three-month residencies for emerging artists from a specified continent who were completing or had recently completed postgraduate art studies in a specified country. Residents would create art, join workshops and educational experiences, and exhibit their work to the local community. Applicants would be evaluated through recommendations, nominations, current projects, past honors, essays, artwork, and interviews, with conflict rules for selection committee members. The foundation would reimburse travel and living expenses after reviewing receipts and would monitor participation at its center. The IRS approved the procedures under IRC § 4945(g)(3), so grants made under them will not be taxable expenditures if the program operates as described.

Ruling snapshot

• Question: Do the foundation's procedures for artist residency grants satisfy IRC § 4945(g)(3)?
• Outcome: Approved, subject to the described selection, reimbursement, supervision, and recordkeeping procedures
• Key authorities: IRC §§ 74(b), 117(a), 170(b)(1)(A)(ii), 170(c)(2)(B), 4945(d)(3), 4945(g); Treas. Reg. § 53.4945-4(c)(1)

Full text (IRS public release)

Department of the Treasury Date:
Internal Revenue Service 06/09/2025
IRS Tax Exempt and Government Entities Taxpayer ID number:

                                                          Person to contact:

Release Number: 202536045
Release Date: 9/5/2025

LEGEND UIL: 4945.04-04
B = Continent

C = Nationality

D = Country

E = Number

x dollars = dollar amount

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 a grant program for artists located in D who are completing or who
recently have completed their postgraduate studies in any artistic medium at an accredited university in D. Your
program is intended to enable cross-cultural exchange and nurture emerging artists from B by offering three-
month residencies to develop their artistic pursuits. Your program artists will create art, participate in
workshops and educational experiences and display their work to the local community at monthly exhibitions
held at your center.

To be eligible for a grant, the applicants must:

• Be located in D and

• Be completing or have recently completed their postgraduate studies in any artistic medium at an accredited

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

university in B.

You will rate the applicants based on the following criteria:

• Letters of recommendation

• Nominations from university professors and/or gallerists in their local artistic communities

• Current projects

• Past awards and honors

• Essays

• Submissions of past artwork

• Personal interviews

The grant program will be advertised through written materials distributed through C artist associations,
universities, and galleries with postgraduate art programs. These organizations will advertise the program on
their websites.

The Selection Committee will be comprised of individuals (who need not be your directors or officers, although
the Selection Committee will consist in some part of your directors) selected by your directors. In selecting
members of the Selection Committee, the directors will choose among individuals with relevant experience,
such as experience in an art-related profession, as a member of a selection committee for a similar program, or
involvement with the local or the D artistic community. Committee members who may be in a position to derive
private benefit, such as members who have sold an artist's work, will not participate in decisions with respect to
such artist's candidacy. Relatives of members of the selection committee, or of your officers, directors, or
substantial contributors are not eligible for awards made under your program.

You intend to award up to x dollars per month with up to E grants per school year. Your awards will be made
on a one time basis. Your grant program will cover costs of travel to the United States and participation in
curated educational experiences. Your program will reimburse resident artists for expenses incidental to their
temporary stay, including food and other reasonable living expenses during their residency. You will disburse
funds for your grants by reviewing receipts before approving for reimbursement.

Your grants will be awarded on the condition and the expectation that resident artists complete their residencies
by working on their individual projects, participating in the curated educational experiences and showcasing
their works at the monthly exhibitions open to the local community. Your grantee will have regular check-ins
with program leaders to assess their progress in respect of the individual goals set at the beginning of the
program.

Your procedure for supervising grants will occur at your center where the resident artists' participation in and
commitment to the program can be observed. If your grant recipient ceases to participate in program activities
for reasons other than illness, bereavement or similar reasons or for a meaningful period of time relative to the
length of the program, their residencies will be terminated and they will cease to be participants in the program.

You will comply with all United States statutes, executive orders and regulations that restrict or prohibit U.S.
persons from engaging in transactions and dealings with designated countries, entities, or individuals, or
otherwise engaging in activities in violation of economic sanctions administered by the Office of Foreign Assets
Control (OFAC).

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

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.

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.

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

• 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).

• 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.

We've sent a copy of this letter to your representative as indicated in your power of attorney.

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

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