In short
A private foundation is a charitable organization that isn't a public charity, usually because its support comes from one family or company rather than the public. It pays an excise tax on net investment income and files Form 990-PF.
Key takeaways
- It must distribute about 5% of its investment assets each year.
- Excise taxes apply to self-dealing, excess business holdings, jeopardizing investments and taxable expenditures.
- Donors to most private foundations face lower deduction limits than for public charities.
Where it's tested
REG: Exempt Organizations Basics — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
The principal distinction between a public charity and a private foundation is that a private foundation: