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Private Foundations: A Trend Towards Program Related Investments

January 27, 2014


A program related investment (PRI) is a powerful tool for a private foundation to positively influence social enterprise while advancing its philanthropy and satisfying its 5% annual minimum distribution requirement.

Traditionally, private foundations have used grant-making activities as the primary means to satisfy their 5% annual minimum payout requirement and to accomplish their tax exempt purposes. However, modern trends reveal a new focus of private foundations on PRIs to achieve the same results.

What is a PRI?

A PRI is an investment, rather than a grant, whose primary purpose is to achieve one or more of the private foundation’s tax exempt purposes and no significant purposes of which is the production of income or the appreciation of property. However, the fact that an investment produces significant income or capital appreciation is not conclusive evidence that income or appreciation was a significant purpose of the investment, and, therefore, does not preclude

Notre Dame Contraceptive Challenge is “Fast-Tracked” in the Seventh Circuit

January 24, 2014


From BenefitsBryanCave.com

The University of Notre Dame, a Catholic higher education institution, challenged ACA’s provision that, as the University describes, requires coverage of certain “abortion-inducing drugs, contraceptives and sterilization procedures, which are contrary to Catholic teaching” in May of 2012.  The University’s original lawsuit was dismissed by a judge in the Northern District of Indiana in December of 2012 for lack of standing.  In its opinion, the district court found that, at that time, the HHS’s regulatory requirement was not sufficiently final to be ripe for review because the government indicated that the regulations would be modified and provide a safe harbor for Notre Dame to protect it from the then-existing regulation.

Given the issuance of the revised guidance in 2013, which provided for the so-called “accommodation” for religious not-for-profit organizations that are not churches and that self-certify their objections to providing the coverage (by shifting the obligation to

IRS Changes Procedures for EINs

January 24, 2014


IRS Changes Procedures for EINs

January 24, 2014

Authored by: Dawna Steelman

Every nonprofit corporation and charitable trust must secure their own federal employer identification numbers (EIN). Effective Jan. 6, 2014, the IRS is no longer providing EINs by phone. Requests for EINs may still be made online, by fax and by mail. EINs requested online will be available immediately; those requested by fax will be available within four days; and those requested by mail will be available within 30 days.

However, the IRS will not process an EIN application online if the responsible party obtained its EIN online. That is to say, if a parent company’s EIN was obtained online, it is not possible to request an EIN online for any newly formed subsidiary of that parent. Those applications for EINs must be faxed or mailed, resulting in longer wait times for the EIN.

Parties applying for EINs should plan in advance now that EINs won’t be available immediately for some

Announcing the Launch of CreditBryanCave.com

January 22, 2014


We are pleased to announce the launch of CreditBryanCave.com, a blog written by professionals who specialize in tax credit transactions. These transactions often include the participation of nonprofit organizations (as well as developers, lenders, syndicators, investors, and community development entities), raise issues impacting tax-exempt organizations, and include transactions involving low-income housing credits, rehabilitation credits, and new market tax credits. Members of our team often work closely with the Tax Credit Team. We encourage you to subscribe to our sister blog by clicking the link below.


IRS Exempt Organization Newsletter 2014-2

January 22, 2014


On January 17, the IRS released its Exempt Organization Newsletter, Issue Number 2014-2. Topics include the following:

  • Phone forum: Governance help for exempt organizations
  • Current Form 990 series forms/instructions & significant changes
  • EO’s free e-newsletter helps keep charities and nonprofits up to date
  • IRS tax videos will help you file in 2014
  • Review of Income Tax Deduction Rules for Charitable Gifts

    January 10, 2014


    zuckerbergThe Chronicle of Philanthropy recently released its list of the Top 10 biggest charitable gifts of 2013 (which is really the Top 15, since 5 gifts tied at 10th place), and do they make me wish I qualified as a charity!

    Topping the list at Number 1 were Mark Zuckerberg of Facebook, and his wife, Priscilla Chan, who gifted $992.2 million of Facebook shares to the Silicon Valley Community Foundation. Number 2 on the list were Nike Chairman Phil Knight and his wife, Penelope Knight, who made a $500 million pledge to the Oregon Health and Science University Foundation.

    The list continues:

    3. Michael Bloomberg: $350 million pledge to Johns Hopkins University 4. Charles B. Johnson: $250 million pledge to Yale University 5. Stephen Ross: $200 million pledge to University of Michigan 6. Muriel Block: $160 million bequest to Yeshiva University 7.

    Investment Funds Maintained by Charitable Organizations

    Section 3(c)(10)(A)(ii) of the Investment Company Act of 1940 generally exempts a private investment fund from registering as an investment company if it is maintained by a charitable organization and is organized and operated exclusively for religious, education, benevolent, fraternal, chartable or reformatory purposes (“Permitted Purposes”) for the collective investment and reinvestment of certain assets.  Recently, the SEC provided new guidance to alleviate concerns related to the use of this exemption.

    The SEC’s Division of Investment Management clarified that a private investment fund that is a legal entity distinct from the charitable organization[1] maintaining the fund and that is organized and operated for the purpose of earning investment returns for charitable organizations will be able to use the exclusion under Section 3(c)(10)(A)(ii).  A fund must still conform to the other conditions Section 3(c)(10) and the staff’s corresponding existing no-action positions.

    The staff recognized that a fund technically might

    IRS Provides Procedures to Regain Tax-Exempt Status Following Automatic Revocation

    January 2, 2014


    The IRS has issued guidance explaining how organizations can apply for reinstatement of tax-exempt status if they lost their status by failing to file an annual return or notice for three consecutive years. (Rev. Proc. 2014-11; 2014-3 IRB 1)

    Download the PDF.