Although most foundations choose to exist in perpetuity, it is increasingly common for foundations to consider closing shop. The reasons for closing shop are often straightforward—donor mandate, a preference to give while living, challenging family dynamics, or a desire to spend out for greater impact in the short term—but the process can be complicated. If... Read More
The best protection against audit problems is to know the Internal Revenue Service (IRS) rules and keep good records. The interest and dividend statements, canceled checks, and so forth that back up your return should be kept with the return. A typical foundation IRS audit notice requests that the following records be made available: Organizing... Read More
The Internal Revenue Code (IRC) contains precise definitions for tax purposes of what is a charity and what is a private foundation. The difference is important because special rules and penalty taxes apply to private foundations but not public charities. Section 501(c)(3) of the IRC defines a charitable organization as follows: Corporations, and any community... Read More
In today’s litigious society, anyone—including your foundation and the individuals associated with it—may be the target of a lawsuit. Although state and federal laws may provide some protection for your board members and volunteers, this immunity will extend to your organization in only a few states. These laws often contain no protection for legal expenses,... Read More
Direct charitable activities (DCAs) are those in which the foundation maintains some significant involvement, rather than simply awarding a grant to a recipient that carries out the activity. Examples include: Conducting educational seminars and conferences Providing goods, shelter, or clothing in which the foundation maintains some significant involvement (e.g., the distribution or delivery of the... Read More
As a private foundation, you are required to make the following documents available to the public: Form 990-PF, the annual information return filed with the Internal Revenue Service (IRS), for the 3 most recent years Form 1023, the application for federal tax-exempt status (and all related correspondence with the IRS) Form 990-T, the unrelated business... Read More