If my foundation gives out significantly more money this year, will we face a tax penalty?

No, a change in the foundation excise tax enacted late last year will make it an easier decision for foundations to increase their payout rates. Previously foundations that paid out at a higher rate than the previous five years were required to pay a 1 percent excise tax, and those that paid out at a lower rate paid 2 percent. The new law provides a single tax rate of 1.39 percent. Whereas the old two-tiered excise tax punished foundations that bumped up their giving in a single year, it is now easier to be flexible with your giving year-to-year.

Still have questions?

Members can access staff experts through our Q&A service by calling 202-580-6560, or post a question to the member community to hear form peers in the field.

Explore our Q&A archive