A grant by a private foundation to an individual is a taxable expenditure if:

  1. The grant is earmarked to be used for a purpose described in Taxable Expenditures,
  2. The grantor foundation causes the grantee, through an oral or written agreement, to engage in a prohibited activity and the grant is in fact a taxable expenditure, and
  3. The grant is made for a purpose other than a purpose of an organization organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, the fostering of national or international amateur sports competition (but only if no part of its activities involve providing athletic facilities or equipment), or the prevention of cruelty to children or animals.

A grant by a private foundation is earmarked if it is given under an agreement (oral or written) that the grant will be used for specific purposes.

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