Grantmaking Policies

TURKISH PHILANTHROPY FUNDS (“TPF”) INTERNATIONAL GRANTMAKING POLICY

Adopted on December 7, 2007

TPF has established procedures which are consistent with (i) the U.S. Department of the Treasury Anti-Terrorist Financing Guidelines (“Treasury Guidelines”) and (ii) the Principles of International Charity, developed by the charitable sector to provide guidance and best practices to ensure compliance with applicable law (“Principles”). These best practices include checking certain published lists and collecting information from potential grantees. In undertaking due diligence, TPF remains sensitive to the burdens and costs placed on its grantees in responding to various requests and to the impact on their work.

In the unlikely event that questions arise from TPF’s due diligence in this area, TPF will seek to ensure that the information is accurate before taking further actions. TPF reserves the right to reject any grant application if TPF, in its sole discretion, believes there is a risk that providing funding to any potential grantee who has applied for a grant could expose TPF to liability.

As recommended by the Treasury Guidelines and the Principles, TPF performs a risk analysis prior to making any grant in support of programs conducted outside the United States to determine the level of due diligence that should be applied with respect to any particular grant. US grantmakers making cross-border grants may exercise one of two options, below[1]. However, it is recommended that both of these requirements are practiced as a part of best-practices:

• Making an equivalency determination (The foundation determines that the grantee organization is the “equivalent” of a US public charity); and

• Exercising expenditure responsibility (The foundation becomes responsible for making certain that the grant funds are used for charitable purposes).

To maintain adequate and effective control over all TPF’s funds dispersed to foreign charities in Turkey, TPF adopted a four-step approach for the distribution and monitoring of the organization’s funds:

1. Obtain documentation on the grantee:

TPF obtains copies of the grantee’s organizational documents (in English) and a description (in English) of all the grantee’s activities and programs, including any proposed activities. These documentation must include at a minimum:

a. An adequate description of the charitable purposes to be served by the foreign charity or project;

b. A determination by TPF Board that such purposes are consistent with the charitable purposes of TPF and worthy of funding;

c. A detailed budget submitted by the recipient charity, which show proposed expenditures by sufficient line items for TPF Board to determine the economic efficiency of the project being funded;

d. A list of specific charitable goals the recipient charity wants to accomplish with TPF funds, together with a statement of the standards by which progress toward the goals can be measured;

e. An identification of the person(s) within the recipient charity who will be responsible for overseeing the funded projects; and

f. A commitment by the recipient charity and its responsible person(s) to fully, faithfully and timely comply with TPF’s reporting and monitoring requirements.

2. Comply with government orders and legislation:

TPF will conduct basic vetting of foreign grantees, and will take appropriate actions including, but not necessarily limited to, some or all of the following:

a.TPF will conduct a reasonable search of publicly available information to determine whether the grantee is suspected of activity relating to terrorism, including terrorist financing or other support. TPF will not enter into a relationship with a grantee where any terrorist-related suspicions exist.

b.TPF has a Grants Administration Protocol designed to confirm the charitable purposes and activities of potential grantees. TPF requires each potential grantee to submit a Grant Eligibility Application (GEA) and update it periodically.

c. In addition, TPF will verify that the potential grantee does not appear on any government list of persons suspected of supporting terrorist activities before any grant is made, whether or not an updated GEA is on file. TPF will check Office of Foreign Assets Control (OFAC)’s master list of Specially Designated Nationals (the “SDN List”), maintained on OFAC’s website atwww.treas.gov/offices/enforcement/ofac/sdn/, to assure itself that its grantees, members of their governing board, and key employees are not subject to OFAC sanctions.

d. In addition to verifying that the potential grantee does not appear on any government list of persons suspected of supporting terrorist activities, TPF will undertake further investigation for those potential grantees that, based on certain criteria, may present a risk of terrorist diversion.

e. Specifically, under the Protocol, TPF staff must inform the Chairperson of the Board and the President/CEO if a potential grant presents fewer than four of the following six characteristics: (1) the grantee has been officially recognized by the Turkish government for at least five years; (2) TPF is able to independently verify the potential grantee’s mission and activities; (3) the grant amount is less than $10,000; (4) the donor of the funds to TPF does not appear on any government list of persons known to support terrorist activities; (5) TPF has received reports from the grantee related to previous grants; (6) TPF has visited the grantee within the previous three years. If fewer than four criteria are present, the Chairperson or the President will oversee further investigation into the potential for terrorist diversion of grant funds.

If, based on information obtained under the Protocol, TPF is unable to verify the charitable status of a potential grantee or if the potential grantee is suspected of supporting terrorism, TPF will not make a grant to that organization.

The policies and practices we have described are consistent with Internal Revenues Service requirements for grants made by the US public charities to foreign organizations and incorporate emerging best practices in ensuring that grant funds are not diverted to terrorist purposes.

3. Enter into a specific written agreement with the grantee, documenting the grantee’s commitments:

As a pre-condition to the issuance of a charitable grant, TPF will require grantees to certify that they are in compliance with all laws, statutes, and regulations restricting U.S. persons from dealing with any individuals, entities, or groups subject to OFAC sanctions, or, in the case of foreign grantees, that they do not deal with any individuals, entities, or groups subject to OFAC sanctions or any other persons known to the foreign grantee to support terrorism or to have violated OFAC sanctions.

As mentioned above, TPF asks grantees to fill out a Grant Eligibility Application (GEA). The intent of this agreement is twofold. First, it commits the grantee to use the funds for strictly specified charitable purposes. Grants for general support should be made only when it is clear that the grantee is the equivalent of a 501(c)(3) organization and operates exclusively for charitable purposes.

Second, it commits the grantee to a number of the basic requirements inherent in section 501(c)(3), such as prohibiting the grantee from providing private benefit (inurnment), influencing legislation (lobbying), affecting the outcomes of elections and transferring assets to a noncharitable entity in case of termination.

All foreign charity funding requests shall be funded with the understanding that TPF retains full control of all such funds, exercises absolute discretion as to their use, and retains the right to discontinue funding at any time it determines that the project goals or standards of performance are not being met, the budget is not being adhered to, accountability standards are not being satisfied, or in this organization’s sole discretion for any other reason.

4. Obtain reports on accounting from the grantee until the grant funds are fully expended.

All approve funding of foreign charities shall be monitored by TPF’s Board through specific reporting from the responsible person for each recipient charity. Reports must be submitted by each recipient charity twice during grant period.

TPF requires the grantee to provide two written reports. Grantees are required to submit a report of project accomplishments at the conclusion of the grant and an interim report during the course of a project. The due date for the interim report is listed on the grant agreement. The final performance report is due within ninety days after the end of the grant period. Interim performance reports serve as a measure of progress achieved on a project and help to identify programmatic and administrative problems that may need to be resolved. The report should describe the use of the funds, compliance with the terms of the grant and the progress the grantee has made in achieving the grant’s purpose. Project milestones shall be briefly evaluated and all significant post-funding developments and problems shall be discussed. The TPF’s Grantmaking Chair shall receive and evaluate these reports and then refer them to the Chair of the Board with a recommendation for continuing or discontinuing funding.

Final performance reports become a permanent record of project accomplishments. Having written reports from the grantee on file will demonstrate to the IRS that TPF is taking the steps necessary to exercise the requisite discretion and control.

If TPF’s vetting practices lead to a finding that a grantee is suspected of activity relating to terrorism, including terrorist financing or other support, TPF may do any of the following:

1. If TPF believes there is a match between the name of one of the individuals or organizations connected with a grantee and a name on the SDN List, TPF will take appropriate due diligence steps to ascertain whether the match is valid, using steps laid out on OFAC’s Web site athttp://www.treas.gov/offices/enforcement/ofac/faq/answer.shtml#hotline; and

2. TPF will consider whether to provide information on any suspicious activity relating to terrorism, including terrorist financing or other support, which does not directly involve an OFAC match, through a referral form available on Treasury’s Web site at http://www.treas.gov/offices/enforcement/key-issues/potecting/index.shtml.

These guidelines shall be presented to all charities seeking/granted funding for foreign charity projects from TPF after the date these guidelines are adopted. As a condition of receiving any future funding, all such charities must attest in writing to their commitment to fully, faithfully and timely comply with these guidelines.

Furthermore, these guidelines shall also be publicized as appropriate to TPF’s United States donors as a means of retaining TPF’s discretion over the use of funds, which are designated for foreign charities or projects and for preserving the tax deductibility of such donations to the fullest extent allowed by law.

[1] Please note that The U.S. Department of the Treasury issued a new version of the “Anti-terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities in September 2006. The “Guidelines” were originally issued in November 2002 and revised in December 2005 to assist charitable organizations in complying with Executive Order 13224 and the USA Patriot Act following 9/11. These experts are prepared according to these guidelines.