Meeting Your Minimum Distribution Requirement

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Generally speaking, a private foundation must make annual charitable expenditures, called qualifying distributions, equal to at least 5% of the fair market value of its previous year’s endowment. Although this basic rule can be stated simply, the calculations are indeed complex.

How does a foundation value the assets used to calculate its distribution requirement? When must new foundations make their first distributions? Do membership dues or conference fees count toward payout? What if a foundation does not have cash sufficient to meet its minimum distribution requirement?

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