---
title: "Mark a draft grant application against the exempt-purpose limits"
url: "https://ailawframework.com/practice/not-for-profit-charities-and-associations/review-a-grant-application-drafted-with-ai/united-states"
type: "task_jurisdiction_version"
site: "AI Law Framework"
id: "A35-B6-3-US"
practice_area: "Not-for-Profit, Charities & Associations"
tier: "yellow"
lawyer_review: "required"
jurisdictions: ["US"]
last_reviewed: "2026-10-22"
---

# Mark a draft grant application against the exempt-purpose limits

> Place each activity the draft application describes beside the purpose clause it is said to further, and mark a sentence that promises a campaign activity, a private benefit, or a deductible contribution.…

Canonical page: https://ailawframework.com/practice/not-for-profit-charities-and-associations/review-a-grant-application-drafted-with-ai/united-states  
Last reviewed: 2026-10-22

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

| Fact | Value |
| --- | --- |
| Practice area | [Not-for-Profit, Charities & Associations](https://ailawframework.com/practice/not-for-profit-charities-and-associations.md) |
| Human involvement | Yellow: Lawyer and AI draft together |
| How AI is used | Place each activity the draft application describes beside the purpose clause it is said to further, and mark a sentence that promises a campaign activity, a private benefit, or a deductible contribution. Write no sentence of the application. |
| What the lawyer must review | You decide whether the application is sent and you write any sentence that is submitted. Treasury Regulation § 1.501(c)(3)-1(c)(1) regards an organisation as operated exclusively for exempt purposes only if it engages primarily in activities which accomplish one or more exempt purposes specified in section 501(c)(3), and not if more than an insubstantial part of its activities is not in furtherance of an exempt purpose. Section 1.501(c)(3)-1(c)(2) provides that it is not so operated if net earnings inure to private shareholders or individuals. Section 1.501(c)(3)-1(c)(3) treats an organisation that participates or intervenes in a political campaign, on behalf of or in opposition to a candidate for public office, as an action organisation that fails the operational test. The IRS exemption page states that organisations described in section 501(c)(3), other than testing-for-public-safety organisations, are eligible to receive tax-deductible contributions in accordance with section 170, and that an excess-benefit transaction with a person having substantial influence may result in an excise tax on that person and on any organisation manager who agrees to the transaction. A draft sentence that states a deductibility or a private-benefit outcome is one you check against those texts. ABA Formal Opinion 512 requires independent verification of generated output before it is relied on. |
| Written for | United States |
| Applies to | [Review a grant application drafted with AI](https://ailawframework.com/practice/not-for-profit-charities-and-associations/review-a-grant-application-drafted-with-ai.md) |

## Checking plan

- What the AI does: Place each activity the draft application describes beside the purpose clause it is said to further, and mark a sentence that promises a campaign activity, a private benefit, or a deductible contribution. Write no sentence of the application.
- Basis: Checked against the linked sources on 22 October 2026. Confirm the current instrument before reliance.

## Notes

- The excise-tax rates in 26 U.S.C. § 4958 are not restated here. The IRS page states that an excise tax may be imposed, and the rates were not re-read for this check.
- Do not measure the application against an Australian grant guideline or an ACNC standard.

## Sources

- [26 CFR § 1.501(c)(3)-1, organisational and operational tests](https://www.law.cornell.edu/cfr/text/26/1.501(c)(3)-1) (checked 2026-10-22)
- [IRS, Exemption requirements for 501(c)(3) organizations](https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-501c3-organizations) (checked 2026-10-22)
- [ABA Formal Opinion 512, Generative Artificial Intelligence Tools (29 July 2024)](https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/ethics-opinions/aba-formal-opinion-512.pdf) (checked 2026-10-22)

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*