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
The Form 990-PF is often the public face of your foundation. It is publicly available at www.guidestar.org. Embedded in the Form 990-PF is a series of oft-neglected questions that give you an opportunity to explain how your charitable activities advance the foundation’s mission and vision. Instead of using the two or three lines provided on the... Read More
Although attending fundraisers and similar events may not seem like a benefit to you, the Internal Revenue Service (IRS) may see it differently: as self-dealing, an act in which a trustee, staff member, or other “disqualified person” receives direct, personal benefit. To avoid falling afoul of laws to prevent self-dealing, many private foundation boards establish... Read More
Funders can engage in advocacy, can fund advocacy, and can encourage grantees to engage in advocacy, with exceptions involving lobbying and electioneering. The two types of lobbying are direct lobbying, communicating with legislators to express a view about specific legislation, and grassroots lobbying, asking the public to communicate with legislators to express a view about... Read More
The Northwest Area Foundation (NWAF) of Minnesota was sued in November 2002 by a potential grantee located in the Yakima Valley of Washington State. NWAF, a grantmaking foundation established in 1934, was organized to help communities throughout an eight-state region reduce poverty. It makes grants totaling approximately $18 million per year. Under its Community Ventures... Read More
Private foundations are permitted to pay for or reimburse ordinary and necessary expenses incurred in carrying out their activities, including the costs of travel by board members. These expenses typically include travel expenses for board meetings or philanthropy conferences, long-distance telephone expenses for conference calls, and expenses incurred while going on site visits (e.g., mileage,... Read More