Year-End Tips for Meeting Your Minimum

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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. For example, a foundation with average assets of $5 million in fiscal year 2017 must make roughly $250,000 of qualifying distributions by the end of fiscal year 2018, or December 31, 2018, if it follows a calendar year.

Although foundations have an additional year to meet the minimum distribution requirement, most foundations make the required payout in the year it is generated (by estimating their year-end assets). Foundations that wait to make their payout in the subsequent year can be caught off guard by precipitously declining assets.

If it’s nearing year’s end and your foundation wants to fulfill its payout requirement within the calendar year, what can you do?

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