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§ 20.4 GRANTS OF FUNDS FROM U.S. CORPORATION-RELATED FOUNDATIONpursuant to a liquidation, merger, redemption, recapitalization, or other similaradjustment, organization, or reorganization.The procedure is engrafted onto the above-described regulations, which setforth ways in which a U.S. private foundation can make a grant to a foreigncharitable organization without contravening the qualifying distribution rulesor the taxable expenditure limitations. 45 These circumstances relate to foreigncharitable organizations that do not have an IRS determination letter recognizingthem as charitable organizations but are equivalent to U.S. public charitableorganizations or private operating foundations (which is usually the case).Absent these rulings, the management of a private foundation must make a“reasonable judgment” that the prospective grantee is a charitable organizationand a “good faith determination” that the potential recipient is a public charityor operating foundation. 46Under this procedure, both this reasonable judgment and good faith determinationmay be made on the basis of a “currently qualified” affidavit preparedby the grantee for the prospective grantor or for another grantor or prospectivegrantor. This procedure requires that the affidavit be written in English and statethe required substantive information. An affidavit is considered current when itreflects the grantee’s latest complete accounting year or (in the case of publiccharitable organizations whose public charity status is not dependent on publicsupport) if the affidavit is updated at the request of the prospective grantor toreflect the grantee’s current data.(g) Grants to Other OrganizationsWhen a private foundation decides to make a grant to an organization that isneither a governmental unit, nor a tax-exempt charitable organization, nor acharitable organization equivalent, the grant must be highly nondiscretionaryand clearly identified with a specific charitable purpose. In this situation, thegrant supports a purpose, determined to qualify as a charitable purpose. Thestructure of the organization carrying out this purpose is therefore overlooked.When public charity status equivalency cannot be established, the privatefoundation may nonetheless make the grant, but the grant must be clearly identifiedfor a precise charitable purpose. The U.S. tax laws do not provide a procedurefor making this type of determination as to a specific charitable purpose.Foundations that have experience in this area have followed a practice of securingfrom the prospective grantee a project description demonstrating how thegrant is to be used for a charitable purpose and/or securing a written commitmentthat the grantee will use the grant only for its stated purposes.Whenever a grant is made to a tax-exempt charitable organization or to anorganization that is a charitable organization equivalent and is a public charity, thepresumption that the grant will be used for charitable purposes is so strong that afoundation is well advised to seek public charity status equivalency for grants toforeign nongovernmental organizations, whenever possible. An additional45 See § 20.4(a), (b), text accompanied by notes 23–25.46 See § 20.4(c), (d), text accompanied by notes 30–31. 577