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
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
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
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) 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
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