A grant is an award of funds to an organization to undertake charitable activities.  Did you know that many of the advances in our health care, including the polio vaccine and the Pap smear, were made possible by grants from private foundations?   Private grants also made possible white lines on highways and Sesame Street. 




Effective grant making results from staying true to the Foundation's mission.  Grants should be made within grant making guidelines and reviewed by the entire board. Grants should not exceed an established pre-set dollar cap or percentage of total giving, if any.

Funds that a foundation distributes to an individual must be made on a true charitable basis in furtherance of the purposes for which the foundation is organized.  For example, a foundation should be able to substantiate the basis for grants awarded to individuals to relieve poverty or under a scholarship or educational program.  See Publication 3833, Disaster Relief, Providing Assistance through Charitable Organizations which covers grants to individuals in the case of a disaster or hardship.

FOUNDATION MENTORS can assist you in establishing your grant making guidelines and forms.

Reference, Research, & Tools For Grantmakers

• United States International Grantmaking (USIG)
• Community Foundation Marketplace
• GrantCraft 
• Principles and Practices for Effective Grantmaking
• Philanthropic Capacity Building Resource (PCBR)
• Guide to Grants   
• Philanthropy Resources Online
• Tools for the Trade: Core Resources for Grantmakers [pdf]  

SCHOLARSHIPS

A scholarship program must be approved in advance by the IRS.  The general guidelines are set out in the Instructions to Schedule H of the Form 1023 (Application for Exempt Status). 

Private Foundations are subject to the requirements of IRC Section 4945(d) (3). 

Although not directed at a private foundation, instructional guidance can be found in the IRS Manual Section 4.76.11.3  (04-01-2003) on Educational Scholarships.