Q&A's Archive - Page 29 of 42 - Exponent Philanthropy

Q&A Archive

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

What should we consider when hiring family members as foundation staff?

As an exception to the private foundation self-dealing rules, family members may be paid reasonable compensation for reasonable and necessary services to the foundation. The Internal Revenue Service says that reasonable compensation “is only such amount as would ordinarily be paid for like services by like enterprises under like circumstances.” No formula is available that... Read More

Can site visit expenses count toward our 5% distribution requirement?

Yes. According to federal tax law, qualifying distributions include reasonable administrative expenses necessary for conducting a foundation’s charitable activities (e.g., staff salaries, insurance, training, travel, rent). Reasonable site visit expenses qualify here. Other qualifying distributions include: Most grants for charitable purposes to public charities, noncharities, and eligible individuals (e.g., scholarships) if specific IRS rules are... Read More

Our accountant says our foundation should distribute the required amount by year end, but don’t we have an additional year?

Although foundations have an additional year to meet the minimum distribution requirement, most foundations make the required payout in the year it is generated (by estimating their year-end assets). Foundations that wait to make their payout in the subsequent year can be caught off guard by precipitously declining assets. If it’s nearing year’s end and... Read More