Charitable giving options

How do you confirm public charity status for potential grantees? 

Private foundations are allowed to give grants to organizations that are officially recognized by the IRS as public charities. The IRS maintains an online database where you can check whether a potential grantee is registered as a public charity. At this site, the Pub 78 database allows you to search all organizations that are officially authorized to receive tax-deductible charitable contributions. The IRS search tool allows you to search by name, location, and employer identification number. As a good due diligence check you can change the database dropdown to the Automatic Revocation of Exemption List, which shows all the organizations whose federal tax exemption was automatically revoked because they did not file an annual tax return for three consecutive years. 

Due to the First Amendment to the Constitution guaranteeing religious freedom, religious groups such as churches, synagogues, and mosques, are automatically considered tax-exempt and will not usually appear in the IRS database of public charities. Government related entities such as schools, parks, and municipalities also do not appear in the database but are generally eligible to receive grants.

If a private foundation provides a grant to an organization that is not officially a public charity, religious group or government related group, then the grant does not count toward satisfying the 5% annual distribution requirement and the foundation may be subject to a severe penalties.

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