A private foundation can make grants to individuals. There are different rules to follow based on the purpose for the grant. These rules are described below.
Grants to individuals for travel, study, or similar purposes
The first purpose for which foundations commonly make grants to individuals is to award travel fellowships, scholarships or research grants to individuals. Your foundation must obtain prior written approval from the IRS to make these types of grants. (If a third party--such as a church or university--actually selects grant recipients and your foundation simply supplies the funding, this is unnecessary.) To obtain such approval, your foundation must show that the grant award process meets the following criteria:
- The grant selection process is objective and non-discriminatory.
- The grant process is designed to achieve a specific objective of the grant recipient.
- The foundation can document the grantee’s fulfillment of these intended activities.
- Those involved in the selection process cannot benefit, directly or indirectly, from the selection of the grantees.
Grants to individuals for disaster relief, economic distress, etc.
Foundations may also make grants to individuals in poverty or in need of special assistance due to circumstances such as floods or tornados to take care of basic living needs such as food and shelter. These grants differ from that above as there is no required outcome or action in response to the grants. These grants must be made in an objective and non-discriminatory fashion. They do not require prior approval from the IRS, but do require careful record-keeping. Exponent Philanthropy recommends getting legal assistance before making grants of this kind.
Grants to individuals for artistic achievement, etc.
Similar to grants for economic distress or disaster relief, foundations may give grants for artistic or literary achievement without prior approval from the IRS. Again, careful record-keeping is essential. Foundations should seek legal counsel before making these grants.
Get your program running with the primer Awarding Grants to Individuals.