Private Foundations

Our Exempt Organizations department advises individuals, families, and companies regarding establishing and operating private foundations and private operating foundations. A private foundation is a charitable organization exempt under Internal Revenue Code section 501(c)(3) typically founded and funded by one person, family, or company.

As charitable giving vehicles, private foundations offer multiple benefits. They are exempt from regular income tax, capital gains tax, gift tax, and estate tax. A person or company is eligible to receive an income tax deduction when making a donation to a private foundation. And a private foundation may receive a portion of an estate without incurring any estate tax.

Additionally, a private foundation offers a substantial degree of control to the founding person, family, or company over the donated assets and how those assets are distributed. The founders may decide to which specific causes or charitable organizations the foundation will make distributions. The founders may also determine the life span of the private foundation. It can be as short or as necessary to achieve the founder’s charitable goals, whether that is several years or in perpetuity. In fact, a private foundation offers the founder more control than any other charitable giving vehicle. Unlike other charitable giving vehicles that require outside fundraising or are controlled by external directors, a private foundation may be closely controlled by a person, family, or company with no outside interference.

Our attorneys can help advise private foundations regarding

  • Planning for charitable tax deductions planning
  • Funding the private foundation
  • Qualifying distributions
  • Avoiding excise penalty taxes for
    • Self-dealing
    • Failure to make distributions
    • Excess business holdings
    • Jeopardy investments
    • Taxable expenditures
  • Program Related Investments, including advising on microlending programs
  • Structuring and regulatory compliance for international grant making programs

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