Generation to Generation

In a press release issued on June 6, 2023, the PGA Tour (a tax-exempt organization under  section 501(c)(6) of the federal Internal Revenue Code), DP World Tour, and LIV Golf, backed by Saudi Arabia’s Public Investment Fund (PIF), announced a transaction that would combine each organization’s businesses and end all pending litigation between the PGA Tour and LIV Golf. Although many details of the transaction remain unknown, it is not expected to be structured as a merger. Instead, a new, for-profit entity would be formed in which PIF would invest billions of dollars and the PGA Tour likely would appoint a majority of the board. Despite all the fanfare surrounding the announcement, this transaction might not make the cut if the parties cannot avoid the tax traps and other obstructions that lie ahead.

Collaborations between charitable organizations and for-profit businesses to simultaneously promote a cause and raise funds for the charity have been demonstrably successful and are occurring with increasing frequency. When embarking on these initiatives, clearly your marketing and development (or advancement) professionals are key team members, but remember to put your legal department or legal advisor on your team to ensure that your good deeds are not punished.

It is not often that you can find inspiration within the Treasury regulations. But if you are a family foundation looking for innovative ways of pursuing your charitable mission, you will come away from reading the nineteen examples in the regulations finalized by the Treasury Department last year with a new enthusiasm for program-related investments, known simply as PRIs. The stories these examples tell of the myriad ways PRIs can achieve positive impact will be compelling to many foundations, especially those that have been reluctant to incorporate PRIs into their grantmaking and investment strategies.