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On May 9, the House Ways and Means Committee released initial legislative text of the tax bill to be marked up this week. The Committee is expected to release a revised and more substantive bill Monday afternoon, so the provisions below could be modified and are subject to change. Individual…

Self-Defense Exception: A legislative proposal to modify the private foundation excise tax on net investment income under IRC section 4940 would qualify as a self-defense issue, because it affects a private foundation’s duties. Private foundations may therefore communicate with the legislature, its…

It is extremely rare for an organization to lose its tax-exempt status. When it happens, it's typically the end result of a three-step process: (1) The IRS conducts an examination of the tax-exempt organization; (2) the IRS issues a letter to the organization proposing revocation; then (3) the…

Internal Risk Management for Foundations In response to the ongoing changes to the legal and policy landscape, it has become increasingly important for foundations and charitable nonprofits to engage best practices for mitigating their potential legal and operational risks. We worked with outside…

What counts as a qualifying distribution? A foundation can meet the minimum-payout requirement with any expenditure that meets the definition of a “qualifying distribution.” In short, the law states a foundation must have qualifying distributions equal to approximately 5%, not a “payout” of 5%. (…

Community Foundations and other public charities may engage in an insubstantial amount of lobbying as part of normal operations. But what are the rules around engaging in self-defense?   Internal Revenue Code Section 4911(d)(2)(C) provides public charities with an exception to the…

Overview The Council is committed to helping our members stay informed about litigation that may have an impact on the philanthropic sector. This resource is designed to be a guide to cases that could impact the operations of foundations and other grantmaking organizations. For a more…

Internal Revenue Code § 4945(e) allows private foundations to appear or communicate with a legislative body concerning a decision of that body that might affect the existence of the foundation, its powers and duties, its tax-exempt status, or the deductibility of contributions to it.  What…

Individual Retirement Accounts (IRA) Gifts and Qualified Charitable Distributions (QCDs) May a donor make a QCD from an IRA to their donor-advised fund (DAF) or someone else’s DAF? What happens if a donor chooses to transfer money from their IRA into a DAF? Do we have to tell them they have…

What is Section 1981? Does the outcome of this case set a new standard for grants that are race-based or race-conscious? If so, why? How will this settlement impact a foundation’s ongoing commitment to DEI within their grantmaking? Will the settlement impact foundations collection of…