Proposed Regulations Provide Helpful New Examples Of "Program-Related Investments"

Originally posted in Private Foundations

As repeatedly promised in its work plan, the IRS recently issued Proposed Regulations containing several new examples of investments that qualify as a "program-related investment" (a "PRI") for purposes of avoiding potential characterization as a "jeopardizing investment," which could result in the imposition of excise taxes on a private foundation and its managers under Section 4944 of the Code. The proposed regulations can be found at 77 F.R. 23429 (April 19, 2012).

Section 4944 imposes excise taxes on a private foundation that makes a "jeopardizing investment" and on the foundation managers who knowingly participate in the making of the investment. A jeopardizing investment is made when, based on the facts and circumstances at the time the investment is made, the foundation managers fail to exercise ordinary business care and prudence in providing for the long-term and short-term needs of the foundation to carry out