GIFT REFUSAL POLICY
In the spirit of assuring the maximum charitable use of philanthropic assets, The Clowes Fund requires its officers, directors, members and staff to decline any and all gifts of tangible property (other than token items of nominal value), cash or investment assets from any non-profit or for-profit entity where such gift is associated, directly or indirectly, with proposals to or grants made by The Clowes Fund. Such gifts are to be politely refused and returned to the sender. Furthermore, in embracing the highest ethical standards, The Clowes Fund requires its officers, directors, members and staff to exercise discretion when considering invitations to events, performances, programs, luncheons or other activities from past, present or potential grantees.
STATEMENT OF NONPROFIT AFFILIATIONS POLICY
The purpose of the Statement of Nonprofit Affiliations* is to assure full disclosure and open communication to help identify any situation where a possible conflict of interest may exist between a person acting in an official capacity for The Clowes Fund and a particular nonprofit agency. A Statement of Nonprofit Affiliations should be completed by every member of the board of directors, grants committee and staff, and filed with the Foundation’s records. If a Clowes Fund member finds himself/herself involved in a discussion regarding a nonprofit organization with which he/she has an affiliation, he/she should:
- Make a statement of disclosure of the affiliation;
- Be available for discussion of the organization; and
- Recuse himself/herself from voting regarding the organization.
*Affiliation is defined as an employee or member of the governing body.
Special Requirements for Grants to 509(a)(3) Supporting Organizations
The Pension Protection Act of 2006 (PPA), although directed primarily at reforms to the nation’s pension system, also included several amendments to the statutes governing charitable contributions and charitable organizations. In light of the PPA, a private foundation, such as The Clowes Fund, must take extra precautions when making grants to charitable organizations that are classified as "supporting organizations" in Internal Revenue Code section 509(a)(3).
Pursuant to the applicable provisions of the PPA, which are now codified in the Internal Revenue Code and amplified in the United States Treasury Regulations and guidance published by the Internal Revenue Service (IRS), a private foundation is limited in the grants it may make to certain types of supporting organizations. Those provisions effectively prohibit grants by a private foundation to:
- Non-functionally integrated Type III supporting organizations; and
- Type I, Type II and functionally integrated Type III supporting organizations that are controlled directly or indirectly by the private foundation’s officers, directors, or other disqualified persons.
Type I and Type II supporting organizations generally are characterized by a significant degree of overlap in their governance structures with the public charities that they support; for example, having a majority of the supporting organization’s Board appointed by its supported organization(s) or by another organization that also controls the supported organization(s). Functionally integrated Type III supporting organizations generally are characterized by a substantial and responsive engagement with their supported public charities. Non-functionally integrated Type III supporting organizations are connected more loosely with their supported public charities (sometimes with no board overlap or substantial engagement with activities), and thus they may have neither (i) the degree of operation, supervision or control by or connection with their supported public charities as do Type I or Type II supporting organizations nor (ii) the same degree of operation in connection with their supported public charities as do functionally integrated Type III supporting organizations.
While the IRS historically did not include a Type I, II or III designation in determination letters issued to supporting organizations, most supporting organizations’ determination letters issued after the PPA’s implementation do reflect such a designation. Based on published guidance from the IRS, however, if you are classified as a supporting organization, The Clowes Fund will ask you to submit:
- Your organization’s most recent IRS determination letter, including any updates or changes;
- Your organization’s current Articles of Incorporation, Bylaws or other governing documents;
- A completed copy of The Clowes Fund’s Supporting Organization Information Request Form.
In addition, The Clowes Fund will confirm your organization’s tax-exempt status in Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, via GuideStar’s Charity Check, which verifies an organization’s public charity classification in the IRS Exempt Organizations Business Master File Extract, updated monthly.