Healthcare scholarship procedures approved

Plain-English summary

A private foundation proposed scholarships for people from a specified area who enroll in health sciences professional schools. The program aims to increase the number of healthcare professionals serving under-resourced communities, especially by improving access to pharmacy and other health services. Applicants must meet residency, enrollment, academic, service, and stated-intent requirements, and recipients must return to practice in the area after graduation and licensure. An independent selection process considers financial need, academic standing, relevant experience, empathy, and commitment to marginalized communities. The foundation will pay schools directly, monitor academic progress and grant use, and stop funding if a recipient becomes ineligible or misuses funds. The IRS approved the procedures under section 4945(g)(1), so grants made under the program will not be taxable expenditures.

Ruling snapshot

• Question: Do the foundation's healthcare scholarship procedures satisfy the advance-approval requirements for grants to individuals?
• Outcome: Approved, provided the program operates as described
• Key authorities: IRC §§ 117, 170(b)(1)(A)(ii), 4945(d)(3), 4945(g)(1), 509(a)(1)

Full text (IRS public release)

Department of the Treasury Date:
Internal Revenue Service 09/09/2024
Tax Exempt and Government Entities Taxpayer ID number:

Person to contact:

Release Number: 202449022
Release Date: 12/6/2024

LEGEND UIL: 4945.04-04
X = Name

Y = Names

M= Numbers

p dollars = Amount

q dollars = Amount

Dear

You asked for advance approval of your scholarship procedures under Internal Revenue Code (IRC) Section
4945(g)(1). You requested approval of your scholarship program to fund the education of certain qualifying
students.

This approval is required because IRC Section 4945 provides for the imposition of taxes on each taxable
expenditure of a private foundation. IRC Section 4945(d)(3) provides that the term “taxable expenditure"
includes any amount paid or incurred by a private foundation as a grant to an individual for travel, study, or
similar purposes by the individual, unless the grant satisfies the advance approval requirement of IRC Section
4945(g).

Our determination

We approved your procedures for awarding scholarships. Based on the information you submitted, and
assuming you will conduct your program as proposed, we determined that your procedures for awarding
scholarships meet the requirements of IRC Section 4945(g)(1). As a result, expenditures you make under these
procedures won't be taxable.

Additionally, awards made under these procedures are scholarship or fellowship grants and are not taxable to
the recipients if they use them for qualified tuition and related expenses (subject to the limitations provided in
IRC Section 117(b)).

Description of your request

Your letter indicates you will operate a scholarship program for individuals from the X enrolling in health
sciences professional schools for the purpose of increasing the number of healthcare professionals practicing in
the X. Your mission is to promote wellness and health equity in under-resourced communities primarily in the
X with a focus on improving access to pharmacy and other healthcare services.

Letter 4792 (Rev. 1-2022)
Catalog Number 58263T

You will award approximately M grants annually to individuals for courses at schools recognized under IRC
Sections 509(a)(1) and 170(b)(1)(A)(ii). Grants awarded will range between p dollars and q dollars per year.
You publicize your scholarship program through flyers, and applications which are distributed to local
community organizations, health professional associations and academic institutions. Individuals who receive
grants from you are required to practice their healthcare profession in the X upon graduation and licensure.

To be eligible for an award, students must be:

a) From the X who will attend college to study health sciences

b) Intending to return to the X to practice their healthcare profession

c) Current or former residents of Y counties

d) Enrolled in or accepted to an accreditation council for pharmacy education / accredited Doctor of Pharmacy
program in a school of college of pharmacy

e) In good academic standing

Applicants are generally required to:

• Submit a Free Application for Federal Student Aid (FAFSA) to the academic institution

• Submit Letters of Recommendation

• Provide transcripts

• Provide prior evidence of experience, working or volunteering on health/health equity initiatives in the X

• Demonstrate the desire to practice their profession in the X

Recipients will be chosen by a selection committee which will include your Executive Director, members of
your Board of Directors, community members and representatives from academic institutions selected at the
discretion of your Board of Directors. No members of the selection committee or their relatives will be eligible

to apply for your scholarships.

Members of the Selection Committee will consider the following:

a) Financial need based on the information in the Free Application for Federal Student Aid (FAFSA). Family
income will be compared against the cost of tuition, fees and living expenses at the applicant's academic
institution.

b) Prior academic performance in that Letters of recommendation will be considered

c) Good academic standing in that this will be verified

d) Prior experience working or volunteering on health/health equity initiatives in the X

e) Demonstrated enthusiasm for serving the marginalized communities in the X

f) Empathy for patient population

g) The demonstrated desire and enthusiasm to practice their profession in the X

Funds will be disbursed directly to the academic institutions to be used for tuition and other academic fees. You
will require grade transcripts and/or a letter from Student Affairs confirming the student's academic standing at
the end of each academic term. If the recipient no longer meets the eligibility criteria or the funds are misused in

any way, funding will be discontinued for that recipient.

The grants will be renewable based on predetermined criteria, including maintenance of good academic
standing which will be verified.

Letter 4792 (Rev. 1-2022)
Catalog Number 58263T

You represent that you will complete the following:

• Arrange to receive and review grantee reports annually and upon completion of the purpose for which the
  grant was awarded,

• Investigate diversion of funds from their intended purposes,

• Take all reasonable and appropriate steps to recover the diverted funds and ensure other grant funds held by
  a grantee are used for their intended purposes, and

• Withhold further payments to grantees until you obtain grantees' assurances that future diversions will not
  occur and that grantees will take extraordinary precautions to prevent future diversion from occurring.

You also represent that you will:

• Maintain all records relating to individual grants including information obtained to evaluate grantees,

• Identify a grantee is a disqualified person,

• Establish the amount and purpose of each grant, and

• Establish that you undertook the supervision and investigation of grants described above.
  Basis for our determination
  IRC Section 4945 imposes excise taxes on the taxable expenditures of private foundations. A taxable expenditure
  is any amount a private foundation pays as a grant to an individual for travel, study or other similar purposes.
  However, a grant that meets all the following requirements of IRC Section 4945(g) is not a taxable expenditure.

• The foundation awards the grant on an objective and nondiscriminatory basis.

• The IRS approves in advance the procedure for awarding the grant.

• The grant is a scholarship or fellowship subject to the provisions of IRC Section 117(a).
• The grant is to be used for study at an educational organization described in IRC Section 170(b)(1)(A)(ii).

Other conditions that apply to this determination

• This determination only covers the grant program described above. This approval will apply to
  succeeding grant programs only if their standards and procedures don't differ significantly from those
  described in your original request.

• This determination applies only to you. It may not be cited as a precedent.

• You cannot rely on the conclusions in this letter if the facts you provided have changed substantially.
  You must report any significant changes to your program to the IRS at:
  Internal Revenue Service
  Exempt Organizations Determinations
  TE/GE Stop 31A Team 105
  P.O. Box 12192
  Covington, KY 41012-0192

• You can't award grants to your creators, officers, directors, trustees, foundation managers, or
  members of selection committees or their relatives.

• All funds distributed to individuals must be made on a charitable basis and further the purposes of your
  organization. You cannot award grants for a purpose that is inconsistent with IRC Section 170(c)(2)(B).

• You should keep adequate records and case histories so that you can substantiate your grant
  distributions with the IRS if necessary.

Letter 4792 (Rev. 1-2022)
Catalog Number 58263T

We'll make this determination letter available for public inspection after deleting personally identifiable
information, as required by IRC Section 6110. We've enclosed Letter 437, Notice of Intention to Disclose -

Rulings, and a copy of the letter that shows our proposed deletions.

• If you disagree with our proposed deletions, follow the instructions in the Letter 437 on how to notify us.
• If you agree with our deletions, you don't need to take any further action.

Please keep a copy of this letter in your records.

If you have questions, you can contact the person shown at the top of this letter.

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

Enclosures:
Letter 437

Letter 4792 (Rev. 1-2022)
Catalog Number 58263T