The IRS recently issued a private letter ruling (PLR 200902014) in which it approved a private foundation’s program to award grants to musical composers to assist them in the creation and performance of new works. The foundation’s grants, intended to cover living expenses of the selected recipients as well as other expenses associated with the composition and performance process, were to be awarded to musicians with post-graduate degrees in fields relating to music composition or performance. The foundation represented that it would award one or two grants per year, and it would require the recipient to coordinate plans for the public performance of the completed work.
After reciting a lengthy list of selection criteria and oversight and record-keeping procedures that the foundation promised to follow, the IRS ruled that the foundation’s proposed program satisfied the requirements applicable to private foundations wishing to award grants to individuals for travel, study, or other similar purposes. This ruling, which applies only to the foundation that requested it, is consistent with the long-standing position of the IRS that the promotion of the arts (and therefore the commissioning of musical compositions) constitutes a charitable purpose under Internal Revenue Code section 501(c)(3), but it also serves as a modern example of the types of procedures and safeguards that will be required when private foundations make grants to individuals.