Q&A's Archive - Page 28 of 41 - Exponent Philanthropy

Q&A Archive

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

Can a private foundation make a grant to a government agency?

Yes. Private foundations can fund the charitable activities of government agencies or units of government (e.g., public libraries, fire departments), and can do so without using expenditure responsibility. Your foundation should request a copy of the document (e.g., legislative action) that shows the grantee’s governmental status. Be sure the grant agreement states that the grant... Read More