Click the button below to download and read the full white paper.
Validating the Tax Status of a Charity: A private foundation must validate the IRS exempt status of every 501(c)(3) public charity every time it makes a grant to it.
Making Scholarship Grants: Many foundations mistakenly believe that they can fund a specific student’s scholarship without advance approval from the IRS—as long as the grant is paid directly to the university and not to the student. Not true.
Paying off Pledges: A foundation may make its own charitable pledges, but it may not satisfy the personal obligation of a board member or other foundation “insider.”
Hosting Fundraising Events: Many states require foundations to report fundraising events and register with the attorney general’s office. Also, the IRS requires foundations to ascribe a value to the benefits provided to attendees and provide a tax receipt.
Buying Tables at Charitable Events: If a private foundation purchases tickets for a charitable event (or is given tickets), there is the potential for self dealing, depending on who attends and the purpose for being there.
Making Grants to Individuals: Grants to relieve human suffering may be made without advance IRS approval, provided that the foundation makes the grant on an objective and non-discriminatory basis; complies with the record-keeping requirements; and does not require the recipient to spend the funds in a particular way.
Compensating Foundation Insiders: Foundation officers and trustees may be paid, provided the compensation is reasonable. Reasonableness of the compensation is judged many factors.