Q&A's Archive - Page 31 of 43 - Exponent Philanthropy

Q&A Archive

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

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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?

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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?

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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

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

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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