What is Foundation Source and why are you offering GrantSafe®?
Foundation Source is the nation’s largest provider of support services for private foundations. One of the services we provide to our clients is verification that the nonprofits their foundations grant to have been approved by the IRS as public charities and currently are in good standing.
To this end, we developed a proprietary database of 501(c)(3) public charities, which is constantly updated with additions and revocations as listed in IRS publications.
In June of 2011, the IRS revoked the charitable status of more than 275,000 U.S. nonprofits because they failed to file a tax return three years in a row. This caused confusion as to which organizations were still valid public charities, and created a significant concern. If a foundation donates to one of these suspect organizations, which it may have legitimately supported in the past, the foundation could now face a 20% penalty on the amount of each grant.
We believe that no philanthropists should be penalized for their good intentions. Therefore, Foundation Source decided to offer GrantSafe® at no cost to the larger foundation community as part of our mission to encourage safe, sound and responsible philanthropy.
Is this FREE for a Limited amount of time?
No. We will continue to offer GrantSafe® as a complimentary public service. This easy-to-use online resource allows private foundations to instantly validate the exempt status of any public charity they choose to support.
How do I know a charity is really verified?
GrantSafe® issues certificates only for those organizations that have been granted public charity tax exempt status by the IRS. In compliance with IRS instructions, GrantSafe® continually monitors, accesses, and makes available the most current information made public by the IRS. GrantSafe® organizes this information into the form of a certificate, which may be maintained in the records of any private foundation. Once a private foundation obtains a certificate for a verified public charity, the private foundation can rely upon this information and make a grant to the verified public charity without having to exercise expenditure responsibility.
Is this your company’s proprietary database?
Yes. GrantSafe®, Foundation Source’s trademarked database, is based on the IRS’s Business Master File and is updated weekly to reflect changes published in the IRS’s Internal Revenue Bulletin regarding modification or revocation of the tax statuses of listed organizations. It meets the latest IRS requirements for validating an organization’s tax status as a public charity.
Must I obtain a certificate to avoid IRS penalties?
Yes. If you obtain information about an organization’s tax-exempt status from a third party (like Foundation Source’s GrantSafe®), rather than the IRS itself, you need a printed or electronically-stored record that includes, among other things, proof of its tax status as a public charity at the time and date of your grant. That way, if the IRS later revokes the organization’s exempt status, you can show that your foundation’s grant was based on up-to-date data from the IRS.
The charity that I give to is not in the database. Why not?
There may be several reasons why a public charity may not be in the GrantSafe® database. The most common reason is that the charity is either a religious organization (church, synagogue or mosque) or a government entity (public school, public university or government agency). Neither of these types of organizations is required to apply for tax exempt status; therefore, the IRS may have no records of such organizations as public charities. Another reason a charity may not be found on GrantSafe® is that the charity has either not yet received a determination letter from the IRS or the IRS has not yet made this charity’s exempt status public. In these cases, private foundations should continuously check GrantSafe®, as the IRS makes tax exempt determinations and publishes regularly an updated list of tax exempt organizations.
I found two organizations with the same name – one with a red X and the other with a green check mark. Which one should I choose?
You should choose the organization with the green check. An organization with a green check is one that a private foundation can make a grant to without executing expenditure responsibility. An organization with a red X that has the same name is typically a private foundation, a sister supporting organization or an operating foundation. If both organizations appear otherwise identical, chances are the organization with the red X is an “old profile” on the IRS database.
I typed in an organization’s name and got back 60 search results. How can I narrow it down?
GrantSafe® lets you add other search parameters, such as EIN and/or address (city, state and country) to narrow a search. Note that many public charities have both local and regional chapters. If there is a particular geographic area where you want your foundation’s grant dollars focused, you can pare down the list of resulting organizations by indicating your desired grant region.
Can I search by EIN?
Yes. GrantSafe® allows private foundations to search for public charities by EIN, as well as by name, both of which appear on every certificate generated.