2237 Private Foundations

Document purpose

To accommodate the needs of private foundations who wish to make gifts or grants to the University. To identify and address relevant legal and tax issues associated with private foundations.


February, 2020


April, 2023


May, 2023

Responsible Office





Private foundations may contribute to the University by making a grant or gift. Often a donor or a member of the donor’s family serves as the manager of the private foundation.  In other cases, the private foundation is managed by a professional staff.

Some private foundation grants require submission of a Grant Eligibility Application before a grant is made to the University. It is the responsibility of the Vice President for Finance and Treasurer or Associate Treasurer to sign all such applications. If a copy of the University’s IRS 501(c)(3) determination letter is required to be attached to the Application, it may be obtained through the Office of Corporate Tax, Compliance and Payroll or the Office of Gifts Accounting & Administration.

Purposes Of Gifts/Grants

All grants or gifts from a private foundation to the University must be for purposes that are consistent with the University’s mission and do not serve personal interests. A foundation gift for the specific benefit of a designated person (e.g. a physician, care provider, student, faculty member or volunteer) will not be accepted.

Conditions On Gifts/Grants

Private foundation gifts or grants may be received by the University subject to certain terms, restrictions or conditions as set forth in the grant or gift agreement. Examples include gifts or grants made to a particular school, or for a particular purpose, or a contribution made over multiple years, or a gift or grant requiring annual general reporting.

Some agreements contain even more specific conditions or reporting, and, in such cases, it is important to determine whether the contribution offered in the agreement is a grant or a gift.   The determination of whether a contribution offered is a grant or a gift is made in accordance with Policy 2213, Classification of Grants and Gifts.

Gifts/Grants Used Internationally

Gifts or grants can be accepted by the University for projects that are carried on in other countries. However, a gift or grant from a US-based private foundation cannot be made to any non-US University entity or affiliate.

Guidelines For Events & Memberships

Based on federal tax law, a gift or grant from a private foundation cannot result in benefits, goods, or services to any person considered a “disqualified person.”  In general, a “disqualified person” is a foundation manager, trustee, substantial contributor to the foundation, and certain family members of those.  The receipt of prohibited benefits by a disqualified person is known as “self-dealing.”

Prohibited benefits generally include tickets, memberships, event tickets, meals, sponsorships, registration fees, preferred parking, preferred seating, discounted merchandise or other preferential treatment from the University.  Acceptance of these benefits by a disqualified person can subject a private foundation and the disqualified person to significant tax penalties. The University has established specific guidelines for events and memberships, which are two of the more common kinds of personal benefits that give rise to questions from the University’s donors.  The guidelines are as follows:

  • Events

It is not permissible for a private foundation to make a gift or grant to fund all or any portion of the purchase price of an event table or ticket when the table/ticket purchase, if made by an individual, would be comprised of both a tax-deductible portion and a non-tax deductible (personal benefit) portion. This is true even if the disqualified person pays for the “personal benefit” portion of the purchase price (the IRS views this as impermissible bifurcation).

There is an exception to this treatment if a private foundation manager, trustee, substantial contributor, or officer is attending the event and will perform a reasonable and necessary business function for the private foundation at the event. Some examples of a business function include the receipt of an award on behalf of the private foundation, or the monitoring of the use of funds that the private foundation provided to the University. Without documentation of a business function, the act of attending the event does not qualify as a permitted exception and the benefit received by the disqualified person may be considered an act of self-dealing subject to tax penalties. Spouses are not included in this exception.

  • Memberships

Under federal tax law, grants from private foundations should not be used to fund a membership for any disqualified person, unless it can be established that the membership is reasonable and necessary in order for the disqualified person to carry out foundation business.  Because it is unlikely that a membership could serve such a reasonable and necessary purpose, the University recommends, in general, that funds offered by a private foundation to pay for individual or family memberships be declined.

Guidelines For Pledges

Under federal tax law, private foundation gifts or grants cannot be used to satisfy all or any portion of a personal pledge or other financial obligation of any other party.

A foundation itself may make a binding pledge to the University, or a donor may execute a non-binding gift intention with the University and then the donor may recommend a gift from a private foundation with the same terms and conditions as the gift intention, subject to the private foundation’s approval requirements.