Non-operating private foundations, the most common variety of private foundation (and the type of foundations we manage), primarily advance their philanthropic missions by making grants to other nonprofit organizations. Although grantmaking is the cornerstone of private foundation philanthropy, there’s a lot more to making a grant than simply writing a check. That’s where we come in.

What Is Grants Management?

Grants management is the end-to-end process by which a foundation accepts applications for grants; then organizes, reviews, and tracks those requests; makes decisions on whether to provide funding; and finally evaluates the effectiveness of the grant awarded.

The IRS has specific regulations around private foundations and their granting activities. For example, private foundations are required to distribute a minimum of 5% of the previous year’s net average assets annually. And, before making a grant, private foundations need to verify that their potential grantees are in good standing with the IRS as tax-exempt, 501(c)(3) public charities. Finally, all of the grants a foundation makes must be recorded and reported on the foundation’s annual tax return.

The grants management services provided by Foundation Source satisfy all IRS regulations around compliance, processing, and reporting. Our grants management also serves another important purpose: It keeps you and other members of the foundation fully informed of foundation activities, so you can be more strategic with your philanthropy.

Foundation Source RequestsTM, our optional grants management service, in integrated into the online platform used by all our clients to run their foundations. Services include:

  • Vetting charities to confirm that they are in good standing with the IRS at the time a grant is made.
  • Performing USA PATRIOT Act due diligence by checking grantee organizations against national and international watch lists of known/suspected criminal or terrorist organizations and individuals.
  • Monitoring transactions for potential compliance violations.
  • Preparing and sending the grant check and transmittal letter from your foundation.
  • Tracking pending grants, so you can know exactly when distributions are made.
  • Tracking grantmaking activity for financial statements.
  • Monitoring your foundation’s progress toward its satisfaction of the 5% minimum distribution requirement.
  • Recording and archiving all qualified distributions for reporting on your foundation tax return.
  • Reporting your grant history by charity, category, year, etc. so that you can review the totality of your foundation’s activity at any time and drill down for a more granular view.

We’ll Help You Make Compliant Grants—Even If You’re Not a Client

As the nation’s largest provider of private foundation services, we feel an obligation to share our knowledge and expertise with the entire private foundation sector. That’s why we offer these two valuable tools completely free of charge:

GrantSafe®

GrantSafe® a free 501c3 lookup service specifically for private foundations that lets you quickly and easily confirm the IRS exempt status of any public charity before making a grant.

IRS regulations require that private foundations verify the exempt status of any 501(c)(3) public charity before making every grant, to ensure it is currently in good standing with the IRS. The most accurate and comprehensive source for this information is the IRS Business Master File (BMF). While the BMF is publicly available, it is neither simple nor easy for an individual to decipher.

GrantSafe’s proprietary technology eliminates that hassle and complication. Finding an organization is now as easy as typing in the organization’s name or tax ID number. A green check mark or red “X” instantly tells you the status. For verified public charities, it takes just a few mouse clicks, and you can print or save a date-stamped Validation Certificate for your files, as required by the IRS. Want to know more about GrantSafe®? Read our FAQs

Annual Reporting on Trends

We issue annual trends reports on the giving and investing activity in private foundations. These reports provide a rare opportunity for foundations to benchmark their own activity against a hard-to-reach peer universe, including the number and size of grants, how much they give as a percentage of assets, where they concentrate their giving by charitable sector and geography, the use of advanced grantmaking features and the timing of their grants during the calendar year.

   Resource:
Annual Report on Foundation Grantmaking