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More and more foundations are using the internet to reach people
they would not have otherwise been able to reach, allowing them to making their
mission known world wide. However, there continues to be an increasing concern
that nonprofits lack the ability in many cases to show real outcome based
measures that to justify the grants they receive. Also, many nonprofits in
general are weak when it comes to true collaboration and not duplicating
services.
Every organization that qualifies for tax exemption as an
organization described in section 501(c)(3) is a private foundation
unless it falls into one of the categories specifically excluded
from the definition of that term (referred to in section 509(a)).
In
addition, certain nonexempt charitable trusts are also treated as
private foundations. Organizations that fall into the excluded
categories are generally those that either have broad public support
or actively function in a supporting relationship to such
organizations. Organizations that test for public safety also are
excluded. Even if an organization falls within one of the categories
excluded from the definition of private foundation, it will be
presumed to be a private foundation, with some exceptions, unless it
gives timely notice to the IRS that it is not a private foundation.
If an organization is required to file the notice, it must do so
within 15 months from the end of the month in which it was
organized. Generally, foundations use
Form 1023,
Application for Recognition of Exemption, for this purpose.
There is an excise tax on the net investment income of most domestic
private foundations. Certain foreign private foundations are also
subject to a tax on gross investment income derived from United
States sources. This tax must be reported on
Form 990-PF,
Return of Private Foundation, and must be paid annually at
the time for filing that return or in quarterly estimated tax
payments if the total tax for the year is $500 or more.
In addition, there are several restrictions and requirements on
private foundations, including:
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restrictions on self-dealing between private foundations and
their substantial contributors and other disqualified persons;
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requirements that the foundation annually distribute income for
charitable purposes;
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limits on their holdings in private businesses;
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provisions that investments must not jeopardize the carrying out
of exempt purposes; and
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provisions to assure that expenditures further exempt purposes.
Certain trusts that have charitable interests as well as private
interests may also be subject to some of the private foundation tax
provisions.
A private foundation cannot be tax exempt nor will contributions
to it be deductible as charitable contributions unless its governing
instrument contains special provisions in addition to those that
apply to all organizations described in 501(c)(3). See
Publication 557,
Tax-Exempt Status for Your Organization, for examples of
these provisions.
Source:
http://www.irs.gov/charities/charitable/article/0,,id=96114,00.html Foundation Finder - From The Foundation Center - A quick and easy tool for
you to search by name for basic information about
foundations within the universe of more than 70,000 private and community
foundations in the U.S. http://lnp.fdncenter.org/finder.html
Another resource to find a community foundation near you is here:
http://www.communityfoundationlocator.org/search/index.cfm
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