In a recent letter to IRS Commissioner Douglas Shulman, members of the American Bar Association Section of Taxation proposed 17 examples of program-related investments (PRIs) by exempt organizations. These new examples supplement 19 other examples that the Section of Taxation submitted in 2002, as well as examples contained in Treasury Regulation section 53.4944-3(b). PRIs are especially important to private foundations, whose investments can run the risk of being classified as jeopardizing investments and thereby subject to an excise tax under Internal Revenue Code section 4944. PRIs are an exception to section 4944 and are not considered to jeopardize the private foundation's exempt purposes. Some of the proposed examples include the development and marketing of a new drug by a private foundation whose exempt purposes include improving public health, the development of a new organic farming process by a private foundation whose exempt purposes include promoting a clean environment, loans made to businesses harmed by a terrorist attack or natural disaster by a private foundation whose exempt purposes include alleviating proverty and providing releif to the poor and distressed, and environmental investments in poor countries.
See also "ABA Members Propose Additional Charitable Program-Related Investment Examples," 2010 TNT 43-16, March 5, 2010.
Posted by Jenny Robertson, Associate Editor, Wealth Strategies Journal.
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