May an employer-sponsored private foundation provide disaster relief to employees of a related employer? A private foundation that is employer-sponsored may make qualified disaster relief payments. A qualified disaster includes a disaster that results from certain terrorist or military actions, a Presidentially declared disaster, a disaster that results from an accident involving a common carrier or any other event that the Secretary of the Treasury determines is catastrophic. The IRS will presume that qualified disaster payments made by a private foundation to employees (or their family members) of an employer that is a disqualified person (such as a company that is a substantial contributor) are consistent with the foundation's charitable purposes if: the class of beneficiaries is large or indefinite (a charitable class), the recipients are selected based on objective determinations of need, and the selection is made using either an independent selection committee or adequate substitute procedures to ensure that any benefit to the employer is incidental and tenuous. The foundation's selection committee is independent if a majority of the members of the committee are persons who are not in a position to exercise substantial influence over the affairs of the employer. If the requirements of this presumption are met, then the foundation's payments in response to a qualified disaster (1) are treated as made for charitable purposes; (2) do not result in prohibited self-dealing merely because the recipient is an employee (or a family member of an employee) of the employer-sponsor; and (3) do not result in taxable compensation to the employees. See Publication 3833 PDF for more information about this presumption, and the general rules that apply to payments by an employer-sponsored foundation.