What counts as a foundation asset under IRS rules?

The IRS doesn’t list every possible foundation asset, but it broadly defines an asset as anything the foundation owns, controls, or receives for its benefit. That definition is wider than most people expect; it goes well beyond the investment portfolio.

Common examples include:

• Cash & cash equivalents – checking, savings, money-market funds
• Investments – stocks, bonds, mutual funds, private equity, program-related loans
• Real & tangible property – buildings, land, vehicles, office equipment, art
• Intangible property – copyrights, trademarks, patents, data licenses
• Receivables & prepaid items – outstanding loans, pledges due, insurance prepayments
• Non-cash perks received – gala tickets, sponsorship benefits, gift cards, airline miles

Every asset belongs to the foundation; not its board, staff, or donors. That means personal use of any of these by a “disqualified person” (insiders or their family members) can trigger self-dealing penalties, even when the asset seems minor or the use seems harmless. A board member who pockets gala tickets meant for the foundation, or a staffer who keeps airline miles earned on foundation travel, can put the foundation at risk just as much as someone misusing the endowment.

Clear policies, good record-keeping, and a habit of declining personal perks go a long way toward keeping your foundation compliant.

Disclaimer: While we pride ourselves on our advice, please realize Exponent Philanthropy is not a law or accounting firm. The information contained in this Q&A is being provided for informational purposes only and not as part of an attorney-client relationship. The information is not a substitute for expert legal, tax, or other professional advice tailored to your specific circumstances. It may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code. We advise that you seek independent counsel for any tax, accounting, or legal issues you may have related to matters that are of a material concern to you or your organization.