Private Foundations

CHAPTER SEVENTEENCorporate Foundations

1. § 17.3 Private Inurement Doctrine
2. § 17.5 Self-Dealing Rules
   1. *(e) Incidental and Tenuous Benefits

§ 17.3 PRIVATE INUREMENT DOCTRINE

p. 824, note 19. Insert following existing text:

In one instance, the IRS reviewed the operations of a private foundation established and controlled by two rate-regulated utilities; the foundation makes grants to a project established jointly by the companies and a public charity. The IRS ruled that private inurement was not occurring because disqualified persons were not benefiting and the project was serving a charitable class (Priv. Ltr. Rul. 201436051). The IRS also ruled that these grants are not self-dealing because any benefits to the companies are incidental and tenuous (see §§ 5.8(d), 17.5(d), (e)).

§ 17.5 SELF-DEALING RULES

(e) Incidental and Tenuous Benefits

*p. 831. Insert as second complete paragraph:

A company-related private foundation was establishing a program to provide on-the-job training and education for the benefit of at-risk, underserved, and underexposed youth living in its community. The company currently operated a summer employment jobs training program for high-school- and college-age youth in the same community. The foundation modeled its program on the company's program and utilizes company resources in the operation of its program. Participants in the foundation's program are selected based on academic performance, performance on aptitude tests, recommendations from instructors ...