Advance approval of a foundation's educational grant procedures for women's health research under § 4945(g)(3)

Plain-English summary

A private foundation must get IRS advance approval of the way it awards grants to individuals, or the grants can trigger an excise tax as "taxable expenditures." Here a foundation asked the IRS to pre-approve procedures for an annual program funding research on women's health. The foundation plans mostly to route funding through other § 501(c)(3) charities and to make direct grants to individual scientists (each holding a Ph.D., M.D., or equivalent) only when a project cannot be supported another way. The IRS reviewed the selection process (an objective, nondiscriminatory review by qualified people who cannot benefit from the choices, milestone-based installment payments, reporting requirements, and anti-terrorism certifications for any foreign grantees) and approved it under § 4945(g)(3). As a result, grants made under these procedures are not taxable expenditures. The approval is conditioned on the foundation running the program as described and keeping records; it does not cover materially different future programs.

Ruling snapshot

• Question: Do the foundation's educational grant-award procedures qualify for advance approval under § 4945(g)(3)?
• Outcome: Approved
• Key authorities: IRC § 4945(g)(3); IRC § 4945(d)(3); Treas. Reg. § 53.4945-4(c)(1); IRC §§ 117(a), 74(b), 170(b)(1)(A)(i)

Full text (IRS public release)

Department of the Treasury                    Date: 03/05/2026
Internal Revenue Service
IRS Tax Exempt and Government Entities         Taxpayer ID number:

                                               Person to contact:
                                               Name:
                                               ID number:
                                               Telephone:

Release Number: 202622011
Release Date: 5/29/26

LEGEND                                         UIL: 4945.04-04

y dollars = Dollars
Z = Number

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 an annual award program to support research on women's health and the
biological mechanisms specific to women. The amount that each grantee will receive, and the term of each
grant, will depend on the size and scope of the scientific project. It is expected that no grant will exceed y
dollars, payable over a multi-year term.

You generally will accomplish your objective by making grants to other organizations identified as tax-exempt
under Section 501(c)(3) of the Internal Revenue Code. You will only make direct grants to scientific
professionals through this program in the event that a project cannot be supported through another charitable
organization. As a result, the number of grantees selected annually has not been determined and will vary from
time to time. However, it is not expected that there will be more than Z grants per year.

You intend to publicize your grant program on your public website, via press releases, and by sharing the
opportunity throughout your professional network of colleagues and current and former grant recipients.

Eligible applicants include individuals working in the medical, scientific research, academic and other similar
settings with a focus on women's health. Applicants may be academic researchers, clinicians, or other scholars
in similar professional roles, and each grantee must hold a Ph.D., M.D. or equivalent degree.

At this time, it is expected that grants only will be made to U.S. citizens and residents. In the unlikely event that
grants are made to a researcher outside of the U.S., the grant will be conditioned on the grantee agreeing to use
all grant funds in compliance with all applicable U.S. laws and regulations, including the Export Administration
Regulations, Executive Order 13224, the Global Terrorism Sanctions Regulations set forth in 31 C.F.R. Part
594, and other applicable U.S. anti-terrorism laws and regulations.

Each grantee will be required to certify that it will not knowingly provide financial support to, employ, or
transact business with terrorists, terrorist organizations, or designated state sponsors of terrorism as defined in
U.S. anti-terrorism laws and regulations. Each grantee will certify that it will not knowingly distribute the
received award funds directly or indirectly to terrorist organizations or to designated state sponsors of terrorism
as defined in U.S. anti-terrorism laws and regulations.

Grantees will be selected by one or more individuals who are appointed by, or are members of, your Board of
Directors, or who have been designated by your Chief Executive Officer or President ("Chief Officers").
Additionally, your Board of Directors and/or Chief Officers may select individuals with lived or professional
experience who would enable them to evaluate application materials and candidates.

Your Chief Executive Officer, who will report to the Board of Directors, initially will be the primary individual
to oversee the selection of grantees. In making determinations, the Chief Executive Officer will consult with
one or more individuals with experience in scientific research and healthcare with the ability to judge, on an
objective and nondiscriminatory basis, the merit of potential grant recipients

The Board of Directors may designate additional individuals to serve as selection committee members. The
selection committee will be composed of individuals who will not be in a position to derive a benefit, directly or
indirectly, based on the selection of any grantees. For the avoidance of doubt, no grant will be made to a
disqualified person or a family member of a disqualified person, nor to a consultant or family member of a
consultant.

To be selected for a grant, the grantee must submit a proposal that sets forth the goals of the research, the
grantee's qualifications, and the projected use of the funds, which may include the costs of research, equipment,
staff, and new technology that would facilitate the research project.

The specific criteria to select recipients will include the applicant's proposed contribution to the field that will
be supported by the grant, examination of their credentials and relevant contributions to the field of research,
responses to application questions, and reference letters and other similar information to assess the applicant's
alignment of the award program.

There will be no limitations or restrictions in the selection criteria or procedures based on race, religion,
national or ethnic origin, or other illegally discriminatory criteria. All persons who submit proposals or
applications of substance will be considered.

To obtain a grant or grant renewal, an individual must propose a research project meeting the criteria detailed
above and remain actively engaged in the proposed research project. Furthermore, to be eligible for a grant
renewal, you must have no information indicating that the original grant is being used for any purpose other
than that for which it was made, and any reports due at the time of the renewal decision pursuant to the terms of
the original grant must have been furnished to you.

All grants will be subject to the terms of an agreement between you and the grantee. Such agreement will
include robust reporting provisions for the grantee as a requirement of the grant and will provide that
distributions only will be made as the grantee meets milestones. To supervise grantees, you will require grantees
to submit comprehensive interim and annual reports describing the use of funds granted and the progress made
by the grantee towards achieving the purposes for which the grant was made, and you will only distribute funds
in installments, subject to a grantee illustrating the accomplishment of specified milestones.

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)(i); 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).

* 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 (Rev. 1-2022)
Catalog Number 58263T