Expenditure responsibility means that the foundation exerts all reasonable efforts and establishes adequate procedures: To see that the grant is spent only for the purpose for which it is made, To obtain full and complete reports from the grantee organization on how the funds are spent, and To make full and detailed reports on the expenditures to the IRS. Certain grants to foreign organizations. Grants made to foreign organizations, other than an organization described in section 509(a)(1), (2), or (3), are subject to the same restrictions on the use of the grant as those imposed on domestic private foundations. These restrictions may be phrased in appropriate terms under foreign law or custom and ordinarily will be considered sufficient if an affidavit or opinion of counsel (of the grantor or grantee) is obtained stating that, under foreign law or custom, the agreement imposes the same restrictions on the use of the grant as those imposed on a domestic private foundation. Special rules for grants by foreign private foundations. The failure of a foreign private foundation to comply with the restrictions imposed on grants will not constitute an act or failure to act that is a prohibited transaction under section 4948(c) of the Code. The exercise of expenditure responsibility may involve one or more of the following elements: Pre-grant inquiry Certain commitments by the grantee Requirements relating to program-related investments Actions with respect to violations of expenditure responsibility requirements Additional information Recordkeeping requirements Reliance by grantors on public charity status of grantees Return to Life Cycle of a Private Foundation
