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Topical Resource Lists

Legal Issues of Grantmaking:
A Bibliography and Resource List

The Catalog of Nonprofit Literature contains bibliographic records with abstracts to the growing body of work concerned with the legal issues of grantmaking. Both comprehensive and highly specific works can be readily found that explain the sometimes complex laws. The resource list here provides citations first to general works, then to works that cover corporate giving, expenditure responsibility, international grantmaking, and program-related investments. To find additional citations to literature on these topics, consult the Catalog of Nonprofit Literature, using the subject heading, Foundations-law and legislation.


General Works

Beggs, Sara and Miranda Perry. Legal Essentials for Small Foundations. Washington, DC: Association of Small Foundations. 2006. 31 p. Call Number: 510 ASF LEG
Discusses legal issues related to grantmaking, operations, administration, investment, and termination.

Edie, John A. Family Foundations and the Law: What You Need to Know. 3rd ed. Washington, DC: Council on Foundations, 2002. Call Number: 914 EDI 2002
Identifies legal issues of concern for members of family foundations and provides "user-friendly" explanations. Some of the topics explained are rules about charitable deductions, excise taxes, self-dealing, minimum payouts, international grantmaking, administrative issues, and the 990-PF. This volume is not intended to discuss every type of legal problem a family foundation could face but rather focuses on those rules that are unique to private foundations and the process of grantmaking from the perspective of family philanthropy.

Edie, John A. and the Council on Foundations. First Steps in Starting a Foundation. 5th ed. Washington, DC: Council on Foundations, 2001. Call Number: 915 EDI
Written for the non-lawyer, the grantmaker, and the person seeking advice on establishing a foundation. Edie discusses in detail the numerous types of organizations that are all generally labeled as foundations by the public--independent, company-sponsored, pass-through, pooled common funds, operating, exempt operating, community, and public charity. The options of establishing a public versus a private foundation are examined as well as the basic tax regulations governing each category and type of foundation. Part six discusses the advantages and disadvantages of starting your foundation as a trust or nonprofit corporation; state and federal tax-exempt status; and other federal requirements. An annotated bibliography contains materials on foundations, tax-exempt law, IRS documents, and a brief list of professional support organizations for nonprofits. The appendix includes samples of articles of incorporation, by-laws, trust agreement, IRS form 1023 and instructions, and a list of principles and practices for effective grantmaking.

Freeman, David F., John A, Edie, and Jane C. Nober. The Handbook on Private Foundations. 3rd ed. Washington, DC: Council on Foundations. 2005. Call Number: 510 FRE 2005
Designed primarily for new foundation staff and trustees, a substantial portion of the book explains legal and regulatory requirements. Chapters include Foundations in the United States, Why Create a Foundation?, First Steps, Grantmaking and Other Charitable Activities, Relationships with Grantseekers and the Public, Governance and Administration, Government Regulation of Foundations, Managing Foundation Assets, and Sources of Information and Assistance. Each chapter includes a substantial bibliography. Appendices provide sample documents, policies, and forms. The final appendix explains the role of intermediary organizations, such as regional associations of grantmakers and the Foundation Center.

Hopkins, Bruce R. Charitable Giving Law Made Easy. Hoboken, NJ: John Wiley & Sons. 2007. Call Number: 954 HOP
This is a companion volume to Hopkins' "Nonprofit Law Made Easy." He covers the law concerning contributions to charitable organizations (private foundations and public charities) with the following chapters: Charitable Giving Law: Basic Concepts; Contributions of Money and Property; Timing of Charitable Deductions; Percentage Limitations on Charitable Deductions; Estate and Gift Tax Considerations; Special Property Rules; Unique Charitable Gift Situations; Gifts of and Using Life Insurance; Other Aspects of Deductible Giving; Planning Giving; International Charitable Giving; and Administration of Charitable Giving Programs.

Hopkins, Bruce R. and Jody Blazek. The Legal Answer Book for Private Foundations. New York, NY: John Wiley & Sons, 2002. Call Number: 914 HOP LEG
Provides quick answers in a FAQ format for officers, lawyers, and accountants of private foundations. The major topics covered include basic definitions, self-dealing, payout requirements, business holdings, investments, taxable expenditures, unrelated business activities, disclosure rules, and termination, among others. Legal citations are given. Indexed.

Hopkins, Bruce R. and Jody Blazek. Private Foundations: Tax Law and Compliance. 2nd ed. Hoboken, NJ: John Wiley & Sons. 2003. Call Number: 914 HOP 2003
Intended as a desk reference for lawyers, accountants, and tax practitioners, covers federal tax laws related to the establishment of private foundations, disqualified persons, self-dealing, mandatory distributions, excess business holdings, investments, taxable expenditures, tax on investment income, unrelated business tax, tax compliance and administrative issues, termination, charitable giving rules, and the distinction between private foundations and public charities, and donor-advised funds. Appendices include sources of the law, Internal Revenue Code sections, table of cases, table of IRS revenue rulings, and an index.

McCoy, Jerry J. and Kathryn W. Miree. Family Foundation Handbook. Chicago, IL: CCH Incorporated. Annual. Call Number: 918 MCC
A handbook for financial and legal advisors to family philanthropies, but also provides information and guidance of interest to laypeople. Covers basic legal and fiscal matters such as tax benefits, types of foundations, supporting organizations, the steps for creating a foundation, the role of charitable trusts, structure and governance of the philanthropy, operating restrictions, grantmaking, administration, and special issues. Provides numerous worksheets, forms, and tables, as well as IRS statutes and Treasury Department regulations.

Nober, Jane C. Economic Development: A Legal Guide for Grantmakers. Washington, DC: Council on Foundations. 2005. viii, 125 p. Call Number: 900 NOB
Discusses how economic development programs may relate to charitable purposes recognized by the Internal Revenue Service. Clarifies various types of economic development assistance that foundations and corporate grantmakers may provide, including program-related investments, functionally related businesses, and others. References to the Internal Revenue Code and other regulations are cited throughout the guide.

Nober, Jane C. Grants to Individuals by Community Foundations. Rev. Ed. Washington, DC: Council on Foundations, 2004. Call Number: 530 NOB
Covers the legal and tax implications of giving directly to individuals by community foundations. The types of support included are scholarships, travel grants, disaster relief, achievement awards, and educational loans. The special rules that relate to limitations of the grantee pool and employee-related scholarships are reviewed. Appendices include IRS forms and regulations as well as numerous sample guidelines and forms in use by various community foundations.

Williams, Grant. "New IRS Rules Tell Foundations How to Comply with Public Disclosure Law." Chronicle of Philanthropy, vol. 12, (27 January 2000): p. 25-6.
Effective March 13, 2000, private foundations must comply with a new public disclosure law. The primary stipulations are that foundations need to make available to anyone photocopies of their three most recent Form 990-PFs, as well as their original application for nonprofit status. Publication of the returns on the Internet can substitute for the copying requirement.

Form 990-PF and instructions for filing it out are available at the Web site of the Internal Revenue Service.

In order to view the recent 990-PFs of specific foundations, refer to Foundation Finder at the Foundation Center's Web site.


Corporate Grantmaking

Carlson, Douglas. "Is Your Foundation Compliant?" Corporate Philanthropy Report, vol. 15, (March 2000): p. 1, 3-4.
Discusses the Internal Revenue Service's new disclosure regulations for private foundations, which give the public greater access to private foundations' annual information returns and exemption paperwork. IRS regulations regarding disclosure of 990-PFs on the Internet are also discussed.

Cohen, Rick. "Corporate Giving: De-cloaking Stealth Philanthropy". Nonprofit Quarterly vol. 9 (Fall 2002) p. 47-9.
Discusses current legislative initiatives that would create greater transparency about corporate giving. Since information about corporate giving can be difficult to ascertain, and in the post-Enron era, greater disclosure requirements are being considered by both the U.S. Senate and the House of Representatives.

Edie, John A. Corporate Giving and the Law: Steering Clear of Trouble. 3rd ed. Washington, DC: Council on Foundations. 2002. Call Number: 934 EDI
Written primarily for corporate giving officers, this handbook identifies legal and regulatory problem areas. Provides a brief explanation of basic rules and recommends additional sources for more in-depth examination. As the tax code makes private company foundations operate by a stricter set of rules than direct corporate giving programs, there is a greater emphasis on company foundations. Includes chapters on company foundations versus corporate giving programs, rules for charitable deductions, state and federal requirements, self-dealing, domestic grants, international grants, and the use of legal counsel.

Nober, Jane C. Company Foundations and the Self-dealing Rules. 3rd ed. Washington, DC: Council on Foundations. 2002. 63 p. Call Number: 550 NOB
Examines the federal tax law prohibitions on self-dealing as they apply to the operations and relationships between a business entity and its related foundation. Explains the inherent problem of self-dealing and provides a summary of some of the applicable general tax law concepts, in addition to methods for aligning foundation grantmaking with the corporate mission. Nober also supplies a summary of the tax penalties for violating the regulations.


Expenditure Responsibility

Edie, John A. Expenditure Responsibility Step by Step. 3rd ed. Washington, DC: Council on Foundations. 2002. Call Number: 918 EDI
Outlines and discusses the five steps to fulfilling the Internal Revenue Service requirements for expenditure responsibility, and explains when funders need to enact this particular procedure in order to avoid tax penalty. In brief, the steps include a pre-grant inquiry, a written agreement, establishment of a separate bank account, regular reports by the grantee, and a foundation report to the IRS. Includes sample forms for each step of the process.

International Grantmaking

Adler, Betsy Buchalter and Ingrid P. Mittermaier. "What's Behind the Foreign Public Charity Equivalence Affidavit?" International Journal of Not-for-Profit Law, vol. 1 (March 1999): p. 131-3.
Provides a chart that grantmakers can use to explain the IRS requirements to foreign-based nonprofits, outlining what the foreign public charity equivalence affidavit asks for, and why the information is necessary.

Bjorklund, Victoria B. and Jennifer I. Goldberg. "Conducting Overseas Site Visits." International Journal of Not-for-Profit Law, vol. 3, December 2000.
Advice for funders that anticipate a site visit in a foreign country. With bibliographic references.

Carroll, Andy. International Grantmaking: Opportunities for Small Foundations. Washington, DC: Association of Small Foundations. 2005. Call Number: 510 ASF INT
Discusses motivations for international grantmaking and explains the options available to foundations.

Chomicz, Thomas. "Grantmaking by Private Foundations in the International Arena." International Journal of Not-for-Profit Law, vol. 1 (December 1998): p. 194-6.
Specifies various legal requirements that must be satisfied, such as determining if an international organization is the equivalent of a public charity, expenditure responsibility, and IRS reports.

Edie, John A. and Jane C. Nober. Beyond our Borders: a Guide to Making Grants Outside the U.S. 3rd ed. Washington, DC: Council on Foundations. 2002. Call Number: 330 EDI 2002
Details the technical and legal requirements for private and community foundations, corporate grantmakers, and public charities for making grants outside the U.S. An appendix includes sample materials, foreign equivalency determination forms, discussion of treaties with Canada, Mexico and Israel, Internal Revenue Service rulings governing friends organizations, suggested grant agreements for public charity grantors, guidance on expenditure responsibility, and more detailed discussions of technical points.

Nichols, Rebecca and Anne Mackinnon. International Grant Making: Funding with a Global View. New York, NY: Ford Foundation. 2004. Call Number: 519 GRA #10
This is an introduction to the complexities of international grantmaking, explaining the options that foundations can use, some of the roadblocks (such as communications), and how working with intermediaries can be helpful.

Renz, Loren, Josefina Atienza, Helen Seidler, Steven Lawrence, and Jennie Altman. International Grantmaking III: An Update on U.S. Foundation Trends. New York, NY: Foundation Center. 2004. Call Number: 330 REN THR
Presents the results of a continuing study by the Foundation Center and the Council on Foundations, here based on data of giving through 2002. Key findings indicate that international giving by all foundations reached approximately $3.2 billion in 2002. A sample of more than 1,000 foundations was studied and compared to a similar sample in earlier studies. Data regarding percentage, amount and consistency of giving, regions and countries, programmatic trends, and numerous other statistics are provided. Includes "Rules for Cross-Border Grantmaking by U.S. Foundations" by Jane C. Nober.

Note: The Council on Foundations publishes a free monthly newsletter International Dateline that contains information about legal issues related to international grantmaking.

Program-Related Investments

Adamson, Rebecca. "Can't Give it Away Fast Enough? Try This." Foundation News & Commentary, vol. 39 (January-February 1998): p. 26-7.
Discusses foundations making program-related investments through intermediaries in order to meet their payout and program goals.

Baxter, Christie I. Program-Related Investments: A Technical Manual for Foundations. New York, NY: John Wiley & Sons, 1997. Call Number: 518 BAX
Contains detailed information on tax and legal issues, as well as internal policy considerations, related to PRIs. Numerous samples of forms, letters, agreements are included.

Carlson, Neil. Program-Related Investing: Skills & Strategies for New PRI Funders. New York, NY: Ford Foundation. 2006. Call Number: 519 GRA #14
Program-related investments, a particular type of grantmaking, are explained in detail. Three different approaches are suggested for embarking on this type of funding, and guidance is provided about the proper legal and oversight structures that are necessary.

Cerny, Milton. "Creative Uses of Program-Related Investments." International Journal of Not-for-Profit Law, vol. 1 (March 1999): p. 7-12
Discusses typical applications of program-related investments, as well as several emerging international models, such as the PRIs given by the Media Development Loan Fund, a private operating foundation established by George Soros in 1995.

Falkenstein, Jeffrey A. (ed.) The PRI Directory: Charitable Loans and Other Program-Related Investments by Foundations.2nd ed. New York, NY: Foundation Center. 2003. Call Number: 518 FC PRI 2003
Directory lists 1,137 program-related investments (PRIs) of at least $10,000 made by 183 foundations between 1999 and 2002. Entries include name and contact information for each foundation, establishment date, donors, officers, and trustees, financial data, fields of interest, types of PRI support, application instructions, among other information. Introductory matter defines PRIs, gives advice to the grantseeker, and provides trends and statistics for this type of grant.

Piton Foundation and the Council on Foundations. Program-Related Investments: A Primer. 2nd ed. Washington, DC: Council on Foundations, 1993.
Includes discussions of legal costs, various types of PRIs, and a chapter about tax issues.

 
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