Q&A's Archive - Page 31 of 44 - Exponent Philanthropy

Q&A Archive

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) without requiring expenditure responsibility. To ensure compliance, request documentation (such as legislative action) confirming the grantee’s governmental status. Additionally, the grant agreement should clearly state that the funds are earmarked for a specific charitable purpose. Read More

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

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

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

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