Whether or not a certain grantmaker awards grants to public schools will depend on the funder’s giving interests and limitations. Some foundations are reluctant to provide funding for otherwise publicly-supported organizations for various reasons. When searching Foundation Directory Online for prospective funders, always check the Limitations field in the grantmaker’s profile for information about any restrictions on funding.
While public schools may apply for recognition of tax-exempt status under section 501(c)(3) of the Internal Revenue Code (IRC), this step is not required in order for such organizations to qualify for private foundation grants. Generally, the IRS treats public school districts as government instrumentalities. As such, they are exempt from federal income tax and eligible to receive tax-deductible contributions from individuals under Section 170(c)(1) of the IRC. Additionally, grants to such organizations, provided that they are for public or charitable purposes, are considered qualifying distributions for grantmaking private foundations.
Since organizations without 501(c)(3) status will not have an IRS determination letter, grantmakers that do award grants to government agencies or instrumentalities may instead request written proof of an organization’s status as a government entity. Examples of supporting documentation may include a letter from an authorized government official or a copy of the legislative act creating a government body.
The IRS also can supply a “government affirmation letter” free of charge, which will describe government entity exemption from Federal income tax and cite applicable Internal Revenue Code sections pertaining to deductible contributions and income exclusion. Most organizations will accept the government affirmation letter as the substantiation they need. Government entities can request a government affirmation letter by contacting the IRS.
Selected resources below may also be helpful.
Books & Articles
Check title availability at Foundation Center collections or through your local library.
- "Grants to government". Foundation News & Commentary (November-December 1994) p. 29-30.
- Hopkins, Bruce R. The Law of Tax-exempt Organizations. Hoboken, NJ: John Wiley & Sons, 2007.
- Hopkins, Bruce R., & Jody Blazek. Private Foundations: Tax Law and Compliance. Hoboken, NJ: John Wiley & Sons, 2008.
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