Q&A's Archive - Page 28 of 42 - Exponent Philanthropy

Q&A Archive

What are the pros and cons of discretionary grantmaking?

Discretionary grantmaking is the practice of allowing board members and, in some cases, committee members, family members, or staff to direct a portion of grantmaking dollars to organizations of their choice. Foundations use discretionary grants in a variety of ways and for many reasons. Read considerations when creating a discretionary grantmaking policy >> Read additional... Read More

Does our foundation need a mission statement?

A mission statement is a short, written declaration about why you are engaging in philanthropy or, if your giving structure is a foundation, why the foundation exists. Mission statements are powerful because they are heartfelt, simple, and easily communicated. A mission can help you: Make the best use of your resources by focusing grants and activity on... Read More

How do foundations set their spending rates?

There are numerous ways to determine the endowment spending rate for a nonprofit. Most nonprofits are familiar with less complex approaches that include spending income, assigning a prespecified percentage of the beginning market value, simply deciding on a spending rate, and using the Internal Revenue Service minimum required payout of 5% for certain private foundations.... Read More

What is the excise tax?

Although private foundations are exempt from the federal income tax, each private foundation must pay an annual excise tax on its net investment income. The Internal Revenue Code also contains five provisions that impose two-tier excise taxes on private foundations that, and disqualified persons who, engage in certain prohibited acts. Learn more here >> Read More

Is our foundation likely to experience an audit?

Less than one-quarter of 1% of all tax returns filed by private foundations are examined by the Internal Revenue Service. Yet certain states have seen an increase in attorney general inquiries (i.e., audits) into the operations of private foundations and components of the Form 990-PF, which usually accompanies a state filing. Attorney general audits can... Read More

What do foundations usually include in a board orientation?

When your organization welcomes new board members, where should you begin? Some of your new trustees may be family members who’ve grown up hearing about the foundation. Others may be experts who specialize in your funding area. Our publication Bringing on the Board: Practical Steps for Orienting Foundation Board Members (available for complimentary member download) guides... Read More