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Affidavits
The Internal Revenue Service (IRS) ruling known as Revenue Procedure 92-94 offers a simplified affidavit procedure that allows private foundation grants to be made to organizations outside the United States. Foundations follow this procedure in order to determine whether a foreign grantee is equivalent to a United States 501(c)(3) public charity or private foundation under U.S. tax law. Procedure 92-94 involves the review and reliance on an affidavit provided by the foreign organization requesting the grant.
Click here to view a chart that helps explain why the information in the affidavit form is requested.
To meet the first part of the two-part equivalency test, a grantee must provide sufficient information to demonstrate that it is organized and operated exclusively for charitable, educational or other exempt purposes — that is, the equivalent of a 501(c)(3) exempt organization in the United States. For this reason, the affidavit procedure requires that the grantee confirm in the affidavit that:
- It is operated exclusively for specified charitable purposes.
- Its country's laws and customs, or its governing documents, do not permit substantial noncharitable activities or lobbying.
- Either its country's laws and customs, or the organization's governing documents, prohibit any direct or indirect intervention in a political campaign.
- Its country's laws and customs, or the organization's governing documents, do not permit any of its assets or income to benefit a private person.
The affidavit procedure also requires that the grantee provide English-language copies of its charter, articles of incorporation, bylaws and other governing documents. This requirement mandates that the Foundation obtain copies of the grantee's organizational documents.
Finally, to ensure that the grantee is organized and operated exclusively for charitable purposes, the affidavit procedure requires the following:
- Affirmation that its assets will be distributed on dissolution to another nonprofit organization for charitable or other exempt purposes or to a government instrumentality.
- A copy of the relevant statutory law or provisions in the grantee's governing instruments controlling the distribution of the organization's assets on liquidation.
Requiring the grantee to provide this information via the affidavit procedure allows the Foundation to determine that the grantee's assets will be distributed to another charitable organization for exempt purposes upon dissolution.
The Foundation may be asked on occasion to make a general purposes grant to a foreign grantee that does not have an acceptable dissolution clause in its governing documents and is located in a country in which the law is unclear on this point. In such cases, the Foundation cannot make the grant.
The second part of the equivalency test involves completion of a public support schedule and major donor support schedule that are attached to the affidavit. In those schedules, the organization details the sources of its support over the last four years (or such shorter period that the organization has been in existence). The Mott Foundation uses the schedules to determine whether the organization is equivalent to a public charity or a private foundation in the United States. See the Affidavits FAQs for more details.