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Results for:   Topic: “Tax and Legal”  

Differences Between Foundations and Other Charities

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

Private Foundation Governance: Learning From Changes to Form 990

In 2008, the Internal Revenue Service (IRS) significantly revised Form 990, the information return filed by public charities, and focused portions of the revised form on public charities’ governance. Although few governance issues raised by the IRS reflect actual legal requirements, the IRS has had the presumably intended effect of leading many public charities to... Read More

Direct Charitable Activities

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

Protecting Your Foundation With Insurance

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

Excess Business Holdings

To prevent certain abuses that could stem from allowing a nonprofit to control a for-profit enterprise (e.g., propping up stock prices), private foundations are prohibited from owning more than a small portion of any business enterprise. Specifically, the Internal Revenue Service prohibits a foundation, together with its disqualified persons, from holding more than a 20%... Read More

Public Disclosure Requirements

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