Common Concerns and Solutions for Grantmaking Foundations

Foundations have experienced exponential growth in their philanthropy efforts and grant sophistication over the last 10 years. And while this expansion is exciting, many are discovering it comes with growing pains.

Having worked closely with dozens of grantmaking foundations through this process, we’ve found the three most common concerns are now related to their grant compliance process, accounting software functionality, and cybersecurity practices.

Grant Compliance Process

Socially-minded foundations are increasingly looking to make an impact in more creative ways, leading to more sophisticated methods of funding and grantmaking. In the last several years, we’ve seen an evolution in philanthropy as organizations pivot to more program-related investments and grants to for-profits,

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Beyond Tax Compliance and Consulting: How a CPA Firm Can Help Your Private Foundation

Many private foundations are already familiar with the tax assistance CPA firms can offer them. But the range of services available to private foundations extends far beyond just compiling the 990-PF. Some other ways a CPA firm can help your private foundation include:

Financial Statement Assurant Services

Have you ever wondered whether your private foundation should have an audit? Some organizations obtain a financial statement audit to comply with state requirements, while others incorporate a financial statement audit into their governance oversight. Before deciding on whether or not to obtain this service, it is helpful to understand exactly what assurances a financial statement audit provides,

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New Flat Excise Tax Rate on Net Investment Income for Private Foundations

On December 20, 2019, President Trump signed the Further Consolidated Appropriations Act, 2020. The bill will, in effect, create a flat net investment income (NII) excise tax rate of 1.39% for private foundations.


Most private foundations are subject to an excise tax on NII, which includes interest, dividends, rents, royalties, payments pertaining to certain security loans, similar investment income items, and capital gains.

Previously, the NII excise tax rate depended on whether the private foundation could meet specific distribution requirements. If the foundation failed to meet the distribution amount, it would then be subject to a 2% excise tax rate.

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Excess Business Holdings Relief for Private Foundations

The Bipartisan Budget Act of 2018 passed a significant exception to the Excess Business Holdings rule.  This exception had been included in H.R. 1 of what became the TCJ Act of 2017, but it was pulled out during the Senate reconciliation process.

Before this change, private foundations were prohibited from holding more than either a 2% de minimis holding in a business enterprise or on a combined basis with all disqualified persons of either 20% or 35% of a business enterprise.  This was restrictive and frustrating for families with closely held businesses who wanted to fund the private foundation with closely held business stock.

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How Should Tax-Exempt Organizations Prepare for Tax Reform?

On Thursday, December 21, President Trump is expected to sign the new law. Most of the Tax Cuts and Jobs Act’s provisions will take effect on January 1, 2018.

This leads to the next logical question: “Is there anything I need to do before January 1st to take advantage of, or avoid, the new tax plan’s negative impacts?”

Although it will take several weeks—and possibly months—for the Treasury to issue regulations to fill in the new tax law’s details, the basic principles of year-end tax planning remain constant: defer income and accelerate deductions.

However, some provisions of the new law add some urgency to this perennial advice.

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