Private Operating Foundations

Operating foundations are private foundations that use the bulk of their income to provide charitable services or to run charitable programs of their own. They make few, if any, grants to outside organizations. To qualify as an operating foundation, specific rules, in addition to the applicable rules for private foundations, must be followed.

Below is everything on our site for private operating foundations. You can use the filtering options on the right to narrow these results.

Under the Pension Protection Act of 2006 (PPA), the rules for public disclosure of the Form 990-T by public charities and private foundations became identical to those for Form 990.

Which forms are affected?

Any Form 990-T filed after August 17, 2006.

The Pension Protection Act (PPA) was signed into law by President Bush on August 17, 2006. The PPA was designed to improve pension plan funding requirements of employers, as well as 401(k), IRA and other retirement plans. The PPA also included numerous provisions that affect charitable giving.

Lawyers rarely tell foundation managers, "Relax, don’t worry so much!" But in the case of "tipping," that’s been our advice for more than 10 years. What is the so-called "tipping problem" and why are so many foundations (still) so worried about it?  

Good relationships between grantmakers and grantees promote more effective philanthropy. But there's nothing that can mess up a good partnership faster than an overzealous lawyer. In seeking to protect their foundation clients, lawyers can sometimes impose excessive requirements on grantees, forcing them to spend unnecessary time and money. While grantmakers should always pay attention to their lawyers' advice, here are some legal recommendations you might want to question.

Requiring grantees to "re-certify" tax-exempt status

After September 11, 2001, many grantmakers and other charitable organizations that were not previously familiar with the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), learned of its existence. As one of the key U.S. government agencies seeking to shut down terrorism funding around the world, OFAC has focused attention on charities as one mechanism for providing financial support to terrorists. As a result, grantmakers and others have dedicated more time and effort to OFAC compliance.

In an effort to ensure that charitable resources are used exclusively for charitable purposes and not used to support terrorist activity, organizations may choose to adopt practices in addition to those explicitly required by law. Among the practices that some charities choose to adopt is including language in their grant agreements requiring grantees to certify that they do not and will not knowingly provide material support to any individual or entity furthering terrorist activities.

Aligning private foundation grantmaking procedures with PPA requirements

Can we back out of a multiyear commitment we made in a prior year because our foundation’s assets have declined?

The answer in many cases is “no.” That is, unless your grantee is willing to release your foundation from its obligation.

Generally, an unconditional, multiyear grant is considered a pledge to the grantee organization. In many states, a pledge is a legally binding obligation. Therefore, your grantee could seek to take you to court should you stop paying the grant.

Generally, there is no legal restriction against making grants to churches, synagogues, mosques or other religious institutions. But there are some things foundations interested in such grantmaking should know.

Everything you need to know to stay out of trouble with third-party representatives.

Does hearing the sentence "Just make that grant check payable to my fiscal agent" stop you in your tracks? It should. If your potential grantees are washing your grant funds through an accommodating charity that has no control over your grant-funded activities, you should be worried.

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