Here are suggestions offered by funders in our online Member Discussion Community: Response 1 Get very clear on your Mission or Program Area. What you are willing to fund and where you are funding is critical. Align yourself with the experts. Talk to other funders. Talk to the best service providers. Talk to academics. Find... Read More
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
A private foundation can pay family members reasonable compensation for reasonable and necessary services to the foundation as an exception to the private foundation self-dealing rules. Reasonable Compensation The IRS defines reasonable compensation as the amount typically paid for similar services in similar circumstances. There’s no exact formula, but consider the foundation’s size, grants, methods,... Read More
Yes. According to federal tax law, reasonable administrative expenses related to a foundation’s charitable activities can count toward the 5% requirement. This includes: Examples of Qualifying Expenses: Staff salaries, insurance, training, travel, rent Reasonable site visit expenses Other Qualifying Distributions: Most grants for charitable purposes (to public charities, noncharities, and eligible individuals like scholarships) if... Read More
No special steps are necessary if the donor advised fund (DAF) is housed at a 501(c)(3) organization, and the donation will count toward your foundation’s 5% distribution requirement. Read more about creating and donating to DAFs in our publication Strategic Uses of Donor Advised Funds. Read More
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