Q&A Archive

Foundation administrative expenses; what’s important to know?

October 19, 2022 Hannah Smith /

Understanding Foundation Administrative Expenses From a tax law perspective, private foundations are allowed to pay “reasonable and necessary” administrative expenses without incurring penalty taxes. These expenses also count toward the foundation’s annual distribution requirement, provided they meet certain criteria. What Qualifies as an Administrative Expense? To be considered an administrative expense, the cost must fall... Read More

What are some ways I can let the public know my foundation gives grants?

August 3, 2022 Hannah Smith /

Whether your foundation is new or well established, here are some ways you can let the public know you give grants: Distribute your mission and guidelines on your website and at local nonprofit events. Talk with other foundations that have similar program interests. They can sometimes refer grantees to you. Ask if your regional association... Read More

Can you share a harassment and discrimination policy sample?

June 8, 2022 Hannah Smith /

Yes, see our Harassment and Discrimination Policy sample document. Read More

We’re considering setting up a scholarship program. Got any tips?

June 8, 2022 Hannah Smith /

Private foundations that want to have a scholarship program—and do the work of publicizing the program, reviewing applications, choosing winners, and monitoring awards—must get prior approval from the Internal Revenue Service. This one-time review ensures that you award scholarships (or other grants for study, travel, or similar purposes) in an objective, nondiscriminatory way. Without IRS... Read More

How can I tell if there are red flags in a nonprofit’s financials?

June 8, 2022 Hannah Smith / General Questions

Identifying Red Flags in a Nonprofit’s Finances Spotting potential issues in a nonprofit’s financial health can help you make informed decisions. Keep an eye out for these warning signs in financial documents and conversations: Financial Statement Red Flags Declining annual revenue or net assets Increasing receivables or recurring operating deficits Consistently low reserves or frequent... Read More

What are some barriers to building strong relationships with grantees?

May 26, 2022 Hannah Smith /

While many funders seek to build strong relationships with their grantees, sometimes barriers prevent them from doing so. One of the biggest barriers funders cited is failing to acknowledge the power dynamic between funders and grantees. In an Exponent Philanthropy blog post, Lori Heninger described how this power imbalance works: “There is a power imbalance... Read More