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Author: fleg9bo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121482  
Subject: Can a non-profit do this? Date: 8/2/2012 6:43 PM
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http://online.wsj.com/article/SB1000087239639044413030457755...

The Ford Foundation awarded a $500,000 grant to the Washington Post to expand its government-accountability coverage, the foundation's second major grant to a for-profit newspaper this year.

The foundation made its first for-profit newspaper grant to the Los Angeles Times this spring — an award of $1 million to enlarge coverage of local immigration and ethnic communities.
____________________

So my question is, can a tax-exempt foundation give money to a private for-profit corporation -- money that will presumably improve that corporation's profits -- and keep its tax-exempt status intact?

--fleg
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Author: JeanDavid Big funky green star, 20000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 116491 of 121482
Subject: Re: Can a non-profit do this? Date: 8/2/2012 8:05 PM
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can a tax-exempt foundation give money to a private for-profit corporation

I am not an attorney of any kind.

A tax exempt corporation can give money to the gas company, the electric company, the sewer company, the water company. It can give money to a heating contractor, the snow plowing company, and so on. I suppose they are not gifts in the usual sense. I believe a tax exempt corporation can give money to an individual and get nothing in return, provided there were no strings attached to the money that was given to the tax exempt. And since corporations are now the same as people, but have fewer responsibilities, they can probably give to anyone they want, always provided they comply with any restrictions placed on the gifts they have received.

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Author: fleg9bo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 116492 of 121482
Subject: Re: Can a non-profit do this? Date: 8/2/2012 8:35 PM
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A tax exempt corporation can give money to the gas company, the electric company, the sewer company, the water company. It can give money to a heating contractor, the snow plowing company, and so on. I suppose they are not gifts in the usual sense.

I didn't fully expand on what made me wonder about the tax-exempt aspect of giving to a for-profit company. For example, you give $1000 to Foundation X and you take a $1000 charitable donation deduction on your Schedule A.

Foundation X gives $100 of your money to Private For-Profit Corporation Z. It's as if you made a donation to that private company and got a tax deduction for it. That's what doesn't seem right. Normally you can't send a check to Exxon and deduct the amount, but apparently you can do it through a foundation.

--fleg

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 116493 of 121482
Subject: Re: Can a non-profit do this? Date: 8/2/2012 10:30 PM
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Foundation X gives $100 of your money to Private For-Profit Corporation Z. It's as if you made a donation to that private company and got a tax deduction for it. That's what doesn't seem right. Normally you can't send a check to Exxon and deduct the amount, but apparently you can do it through a foundation.

--fleg

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In the case you describe, the foundation isn't paying my Exxon credit card bill for me. THAT would NOT be deductible. But if they're paying Exxon for gas for a fleet of minivans for a sheltered workshop they operate, that's different. And if that is what my contribution to the foundation is for, that is deductible.

It's because of people pulling tricks like that, that charities are required to put that verbiage about "No goods or services were provided in exchange for this contribution," etc.

Bill

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Author: JGBFool Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 116494 of 121482
Subject: Re: Can a non-profit do this? Date: 8/4/2012 11:54 AM
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It's because of people pulling tricks like that, that charities are required to put that verbiage about "No goods or services were provided in exchange for this contribution," etc.

I thought that disclaimer was because in some situations, goods/services ARE provided in exchange for a contribution, so only a portion of the contribution is deductible. Examples:
--Donations to PBS for which they send you a DVD that is a fraction of the value of the donation-- you must subtract the value of the DVD from your donation amount when you file taxes
--Charity dinners-- you are getting a meal included, so the charity tells you the value of the meal that you need to subtract from the donation amount

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