Private Foundations

Private foundations, notwithstanding the fact that they are §501(c)(3) charitable organizations, are a very different animal than §501(c)(3) public charities. One of the biggest differences between private foundations and public charities is that private foundations are subject to one income tax and potentially subject to five separate excise (penalty) taxes. Additionally, the operations of private foundations are far more severely restricted by the Internal Revenue Code and the accompanying Regulations than the operations of public charities. Finally, the annual tax return to be filed by private foundations (the Form 990-PF) is far different than the Form 990, notwithstanding the fact that they sound like very similar Forms.

Because private foundations are so different that other §501(c)(3) entities, specific expertise is necessary to work with private foundations, different from the expertise necessary to work with public charities. That being said, YH Advisors has developed distinctive expertise in addressing the tax, legal and accounting needs of private foundations; specifically, we offer the following compliance and consulting services to our private foundation clients:

  • Complete and accurate preparing of the Form 990-PF.
  • Consulting regarding the conversion of private foundations to public charities.
  • Dissolving of a private foundation.
  • Computing the annual minimum distribution requirement projections for a private foundation so as to ensure that a private foundation satisfies their minimum distribution requirements.
  • Net investment income tax rate planning for a private foundation to take advantage of the 1% net investment income tax rate.
  • Ensuring that all the necessary steps for the exercising of expenditure responsibility have been appropriately taken in relation to grants made by a private foundation to foreign charities and needy foreign individuals.
  • Providing guidance regarding the allocation of indirect expenses incurred by a private foundation in order to classify such as qualifying distributions.
  • Computing the fair market value of all of the private foundation’s assets for purposes for properly calculating the private foundation’s minimum investment return.
  • Providing guidance and best practices so that the private foundation can best avoid the conducting of self-dealing transactions.
  • Providing guidance so that a private foundation can best avoid making jeopardizing investments or investing too much in a business enterprise (excess business holdings).
  • Helping private foundations institute a compliant scholarship granting program so as to avoid the making of taxable expenditures.