X is a financial company whose shares are listed and traded on a national exchange. Y, a private foundation, grants X a loan at a lower rate of market interest to encourage X to build a new investment in a dilapidated urban area that X would not be willing to create such an incentive because of the high risks involved. The loan is granted as part of a territorial economic development programme implemented by Y, for example by providing employment opportunities for low wages in the new plant, and there are no essential objectives for the creation of products or the valuation of real estate. The loan significantly promotes the completion of Y`s exempt activities and would have been granted not, but for such a relationship between the loan and the activities exempted from Y. As a result, even though X is large and well established, the investment is related to the program. Finally, one commentator called for additional guidelines on the circumstances under which IRPs may give rise to unauthorized private benefits and specifically requested an example of an IRP with the primary objective of using members in need of a public utility class, but also to benefit those who do not need them (with the exception of the IRP recipient himself). This commentator appeared to ask for guidance on the circumstances under which the private benefit granted by an investment could affect the exempt status of an organization within the meaning of Section 501, paragraph 3, rather than affecting the status of the investment as a PRI and, as such, would not fall within the scope of those final regulations. The effects of the private benefit on exempt status are addressed in the regulations covered in Section 501, paragraph 3, as well as in a number of revenue decisions. See point 1.501 (c) (3)-1 (d) (1)). Mr. Rul. 76-206, 1976-1 CB 154; Mr. Rul.
74-587, 1974-2 CB 162; Mr. Rul. 70-186, 1970-1 CB 128. To the extent that the commentator has requested guidelines on the impact of private benefits on IRP status, the vast majority of the examples presented in existing and proposed regulations include private benefits for one or more persons who are not members of a public utility class (including, often, the recipient of the IRP itself) which, in addition to the main purpose of the investment, , is the main purpose of the investment, to accomplish an exempt goal. As a result, the Ministry of Finance and the IRS do not believe that additional examples are needed in this regard, and the final regulations do not accept this comment to Y, a private foundation, which is paid below the market interest rate for comparable-risk commercial loans for poor people living in a developing country, to enable them to create small businesses such as a roadside orchard. Traditional sources of financing have not been able to provide loans on economically viable terms or have not been able to provide such loans. Y`s main objective in providing credit is to provide assistance to the poor and needy. There is no essential objective of the loans to produce income or to value real estate. The loans significantly promote the completion of Y`s exempt activities and would have been granted not, but for such a relationship between loans and activities exempt from Y. As a result, loans to poor people living in W are investments related to the program. Y, a private foundation, invests at high risk in modest housing that the federal housing government insures in debt.
Ys` main objective in investing is to finance the purchase, renovation and construction of housing for low-wage earners. Investment is not essential, the production of income or the valuation of real estate. The investment greatly promotes the completion of Y`s exempt activities and would not have been carried out, but for such a link between the investment and the activities exempted from Y.