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Results for:   Topic: “Tax and Legal”  

Key Private Foundation Laws

Private foundations are subject to several sections within the Internal Revenue Code (IRC). The following list is not comprehensive but addresses eight sections that will guide foundation managers throughout the life of the foundation: Section 4940 imposes an annual excise tax on a private foundation’s net investment income. Foundations will need to pay taxes on... Read More

10 Ways Self-Dealing Can Creep Into a Foundation’s Work

The general rule is this: Certain insiders known as disqualified persons are prohibited from engaging in a specific list of transactions with a private foundation, unless exists a stated exception exists. If you are a board member, officer, or substantial contributor to a private foundation, you, your family members, and entities controlled by you must... Read More

Is Our Foundation Likely to Experience an IRS Audit?

Less than one-quarter of 1% of all tax returns filed by private foundations are examined by the Internal Revenue Service. Yet, certain states have seen an increase in attorney general inquiries (i.e., audits) into the operations of private foundations and components of the Form 990-PF, which usually accompanies a state filing. Attorney general audits can... Read More

Taxable Expenditures

Taxable expenditures are grants or expenditures made by a private foundation that are either prohibited, or in Internal Revenue Service (IRS)-specified areas without following the strict IRS rules. The following list provides brief descriptions of those expenditures that are completely prohibited; the list after that provides additional requirements to avoid being taxable expenditures. The following... Read More

Nonprofit Sector 101

Nonprofit sector collectively describes the institutions and organizations in American society that are neither government nor business. Nonprofit is a layperson’s term describing a range of organizations—including private foundations—that contribute to the public good. The nonprofit sector in the United States contains more than 1.5 million nonprofit organizations comprising at least 7% of the U.S.... Read More

A Foundation Sued by a Potential Grantee

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