(a) Entities eligible for grants must be private nonprofit organizations with tax exempt status, designated by the Internal Revenue Service. A nonprofit organization is defined as any corporation, trust, association, cooperative, or other organization that:

1. (1) Is operated primarily for scientific, education, service, charitable, or similar purposes in the public interest.
2. (2) Is not organized primarily for profit.
3. (3) Uses its net proceeds to maintain, improve, and/or expand its operations.

(e) Applicants must also have the proven ability, background, experience (as evidenced by the organization's satisfactory completion of project(s) similar to those proposed), legal authority, and actual capacity to provide technical assistance and/or training on a regional basis to associations as provided in § 1775.33. To meet the requirement of actual capacity, an applicant must either:

1. (1) Have the necessary resources to provide technical assistance and/or training to associations in rural areas through its staff, or
2. (2) Be assisted by an affiliate or member organization which has such background and experience and which agrees, in writing, that it will provide the assistance, or
3. (3) Contract with a nonaffiliated organization for not more than 49 percent of the grant to provide the proposed assistance.