Can Mott Foundation grant funds be used for lobbying activities?
No. Mott Foundation grant funds may not be used for lobbying expenditures (see the Lobbying Guidelines); however, other foundations may allow their funds to be used for lobbying activities. We recommend grantees contact their other donors regarding their lobbying procedures and requirements.
Can the Mott Foundation make a grant to organizations other than Section 501(c)(3) public charities (and their foreign equivalents), units of governments, international organizations designated by executive order or exempt operating foundations?
Yes. However, the Foundation will be required to exercise expenditure responsibility. In addition to all the expenditure-responsibility rules, there are a few other restrictions that apply solely to grants to private foundations and to foreign private foundation equivalents.
What is expenditure responsibility?
Expenditure responsibility is the U.S. federally mandated procedure that a private foundation must follow for any grant made to an organization that is not an IRS-recognized public charity. Grants to the following types of organizations require expenditure responsibility:
- Tax exempt organizations not classified under Section 501(c)(3).
- Nonfunctionally Integrated Type III supporting organizations classified under Section 509(a)(3).
- Private non-operating foundations.
- Private operating foundations.
- For-profit companies.
- New public charities that have not obtained Section 501(c)(3) status from the Internal Revenue Service.
- Organizations formed outside of the United States.
(Certain grants may be made to such entities outside the United States without the need for expenditure responsibility if the Foundation completes a procedure called “equivalency determination.”)
Except for units of foreign governments, virtually all potential grantees organized outside the United States are not public charities recognized by the IRS. Although it is possible for them to obtain such recognition, few have done so. Thus, it is only natural that exercising expenditure responsibility plays a significant role in making grants to non-U.S. organizations.
Private foundations have two choices when making grants to foreign organizations:
- Determine that the non-U.S. grantee is the “equivalent” of a U.S. public charity; or
- Exercise expenditure responsibility. (The five basic steps of expenditure responsibility are discussed below.)
An “equivalency determination” can be accomplished by obtaining a written opinion of legal counsel or by Foundation staff making a reasonable determination of equivalency based on submission of an affidavit and other documents from the potential grantee. (See the Affidavits page.)
Expenditure responsibility has five basic steps:
- Pre-grant inquiry. The Foundation must make a reasonable investigation of the grantee to make sure that the grantee is capable of performing the charitable activity that is to be funded.
- Written agreement. The grantee must sign a written agreement with the Foundation that specifically sets out what charitable activities are to be accomplished with the funds to be granted. The agreement must also contain certain limitations (such as prohibiting the use of any of the funds for lobbying).
- Separate account. Unless the grantee is another private foundation or private foundation equivalent, the grantee must establish a separate account for the funds. Charitable dollars cannot be commingled with noncharitable funds.
- Regular reports. The grantee must provide regular status reports (narrative and financial) on the expenditure of the funds and the progress made in fulfilling the charitable purpose for which the funds are granted.
- Report to IRS on the tax return. When filing the Form 990-PF tax return for any year in which a payment for an expenditure-responsibility grant is made, the foundation must indicate that expenditure responsibility payments were made and must add a schedule to the form with a brief description of each grant indicating the grantee, the amount, the charitable purpose and the current status of the grant.
Does the Mott Foundation make grants to individuals?
No, the Mott Foundation does not make grants to individuals. Also, for any grants involving regranting, the Mott Foundation restricts the grantee from regranting to individuals.
Does the Mott Foundation support indirect costs of a project, and if so, what is the upper limit to such costs as a budget item?
Yes, the Mott Foundation does support indirect costs. However, indirect cost percentages are up to the discretion of the program officer. Indirect costs may not exceed the appropriate level based on project-specific direct costs. Indirect costs typically include rent / occupancy, administration costs, equipment and overhead. Other costs such as supplies, printing and communications may be either direct or indirect, depending on the project.
If, during the grant period, the project spins off and establishes itself as a separate legal entity or transfers to a different organization, can the original grantee transfer the unexpended funds to the new organization?
No. The unexpended funds must be refunded to the Foundation. The new organization is required to submit a proposal to the Foundation.
Prospective foreign grantees must submit:
- The organization’s founding documents (such as articles of incorporation, bylaws, deed, trust agreement, memorandum of association, tax classification or certification from appropriate authorities) and governing law. All documents must be provided in English and in the grantee’s native language.
- The registration of the organization with government authorities when registration is required by country or local law.
- An affidavit and public support and major donor support schedules (see Affidavits).
- A copy of the organization’s most recent financial statements (audited financials are preferred but not required).
- A list of the organization’s governing board and officers.
- An annual report or brief description of the organization’s history, goals, mission, experience and track record.
- Additional information if the project includes activity to be conducted in the United States.
How does the grantee request a no-cost extension of the grant period?
A request letter signed by an authorized representative of the organization, which includes the reason for the grant extension and the extension date, may be submitted to the Foundation any time during the grant period but before the end of the grant. If the grantee is a university, an authorized representative of the Office of Sponsored Research or Grants and Contracts must sign the request letter. Extension requests are not automatic and must be approved by the Foundation. Repeated requests for extension may be denied.
Under a project support grant, is an organization allowed to carry over funds to the grant renewal?
No. Undisbursed project funds must be refunded to the Mott Foundation as provided in the grant agreement.
Does the Mott Foundation make grants to network / partnership / consortium organizations?
Yes. However, one organization, the Mott grantee, must be programmatically and fiscally responsible for the entire project. Consulting contracts or regranting agreements between the network / partnership / consortium organizations is required.
Can Mott Foundation grants funds be used to meet donor-matching requirements?
Yes. In fact, the Foundation encourages its grantees to seek matching gifts as a way to diversify the grantee organization’s funding sources. This method of fundraising is typically referred to as Leverage. Leverage occurs when a small amount of money is given with the express purpose of attracting larger funding from other sources or of providing the organization with the tools it needs to raise other kinds of funds. Sometimes also known as the “multiplier effect.”