Planning for Private Operating Foundations

Posted on Jan 12, 2023

Whether an organization intends to be a private operating foundation from the beginning, or it is a non-operating private foundation or public charity that changes its foundation status to private operating foundation status, careful planning is needed to meet all the tax requirements.

Private foundations, in general, are subject to different rules and regulations than other types of charitable organizations, such as public charities. The key differences is that private foundations, including operating foundations, are required to pay an excise tax on net investment income, required distributions or payouts, and the prohibition of certain transactions or investment ownership, including:

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