Private Foundations

CHAPTER EIGHTJeopardizing Investments

1. § 8.1 General Rules
   1. (a) Defining Jeopardy
2. § 8.2 Prudent Investments
   1. (g) Mission-Related Investments
3. § 8.3 Program-Related Investments

§ 8.1 GENERAL RULES

(a) Defining Jeopardy

p. 356, last paragraph. Insert as last sentence:

In connection with a ruling holding that a private foundation's ownership of a blocker corporation was not a jeopardizing investment, the IRS observed that the foundation's managers determined that its foreign investments can be better managed, result in a more tax-efficient structure, and enhance the foundation's ability to fulfill its charitable mission by means of the corporation, and that the foundation worked closely with its investment advisors in making this determination.^15.1

§ 8.2 PRUDENT INVESTMENTS

p. 373. Insert following second complete paragraph, before heading:

(g) Mission-Related Investments

The IRS published guidance on application of the jeopardizing investments rules to investments that are made by private foundations for charitable purposes.^49.1 This development is inapplicable to program-related investments.^49.2

Pursuant to the tax regulations, an investment made by a private foundation is not considered a jeopardizing investment if, in making the investment, the foundation managers exercise ordinary business care and prudence (under the circumstances prevailing at the time of the investment) in providing for the long-term and short-term financial needs of the foundation to carry out ...