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Foundation Source / 10 Things You Didn’t Know You Could Do With Your Foundation

10 Things You Didn't Know You Could Do With Your Foundation

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The IRS allows private foundations wide latitude to undertake creative, inventive and effective philanthropy. Learn more.

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Grant to Individuals: Private foundations are permitted to provide funds directly to individuals for emergency relief or hardship assistance.

Direct Charitable Activities: A private foundation can conduct its own charitable programs, in addition to its granting activities, without converting to an operating foundation.

Pay Expenses for Due Diligence: The IRS considers due diligence related to the foundation’s mission a legitimate expense. This can include site visits, board meetings, and conferences in the foundation’s areas of interest.

Develop Grant Agreements: For major or complicated grants, a private foundation can create a legally binding grant agreement with the recipient that lays out the gift’s purpose, terms, and conditions.

Make Program-Related Investments (PRIs): Loans, loan guarantees, and equity investments, when made by a foundation to support a charitable purpose, are called Program-Related Investments (PRIs). Since PRIs are paid back (potentially with interest), you are able to recycle your philanthropic capital for other charitable purposes.

Give Awards and Prizes to Spur Progress: Awards reward past performance (e.g., the Nobel Prize), while prizes serve as an incentive for future performance to spur innovation in a specific area (e.g., the X Prize competition).

Create Non-Traditional Scholarships: A private foundation is the only charitable vehicle that allows donors to both create a scholarship program and select the individual recipients. Traditional scholarships typically go to those gifted in academics or sports. Non-traditional scholarships can create opportunities for disadvantaged learners to lift themselves up to a better life.

Appoint Agents: A foundation can give “agency” to someone outside the organization, legally empowering him or her to act on its behalf. Agents can serve as “boots on the ground” to extend a foundation’s reach and efficacy.

Donate Internationally: Private foundations can grant directly to overseas charitable organizations, even when there is no IRS-recognized 501(c)(3) entity to serve as an intermediary.

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