Practical Law Glossary Item w-021-9923 (Approx. 2 pages)
Glossary
Private Foundation
A type of charitable organization. A charitable organization is presumed to be a private foundation unless it qualifies and files with the IRS as a public charity under IRC § 509(a) of the Internal Revenue Code. Unlike public charities, a private foundation has one main source of funding (usually gifts from one family or corporation). While a private foundation is eligible for federal tax-exempt status, it has several disadvantages compared to a public charity, including:
It faces stricter regulations and requirements.
It is subject to excise taxes on net income.
Donors have a lower deductibility cap on charitable contributions.