Private Foundation Governance & Operations
Running a private foundation means navigating complex tax rules, distribution requirements, excise taxes, and fiduciary obligations. Wylie Advisory is the operational partner who handles the practical work — so you can focus on your foundation's mission and impact.
Common Foundation Challenges
Whether you're a new foundation steward or managing an established foundation, these situations are familiar.
You've Inherited a Foundation
You're now responsible for an organization you didn't create. Where do you start? What are the legal and tax obligations? How do you honor the donor's intent while building sustainable operations?
You're Running It, But Are You Compliant?
Your foundation is active and making grants, but you're not confident everything is in order. Are you meeting the 5% distribution requirement? Is your governance documented? What could the IRS question on your next 990-PF?
You Need Support Without Paying Attorney Rates
You have operational questions and strategic decisions to make, but hiring a lawyer for every issue isn't practical or sustainable. You need a trusted advisor who understands foundation compliance and governance.
Foundation Services We Offer
Whether you're just stepping into your role as foundation steward or looking for ongoing operational support, we have the right service for your foundation's stage and needs.
Foundation Transition Navigator
Comprehensive guidance for inheriting a foundation or managing a major transition. We help you understand the foundation's current state, obligations, and opportunities.
$7,500
Learn MoreFoundation Governance Review
A thorough assessment of your foundation's governance structure, policies, and compliance. We identify gaps and provide actionable recommendations.
$2,000
Learn MoreFoundation Advisory Calls
Ongoing guidance on specific questions and challenges. Perfect for stewards who need expert input on compliance, governance, or operational decisions.
$275/hour
Learn MoreFoundation Management Retainer
Scalable foundation management — from monthly compliance monitoring to full-service management including grants administration, strategic planning, and communications.
From $1,500/month
Learn MoreKey Topics in Foundation Governance
Understanding these core areas will help you run your foundation effectively and stay compliant with IRS requirements.
Excise Taxes (Chapter 42)
Private foundations are subject to federal excise taxes on investment income (2% base rate, potential 1% reduction for higher payout rates). Understanding when these apply and how to minimize them is critical for foundation financial planning.
Distribution Requirements (5% Rule)
Most private foundations must distribute at least 5% of their average asset value annually. This requirement affects your grantmaking strategy and long-term planning. Missing the threshold triggers penalties.
Self-Dealing Rules
Private foundations have strict rules around transactions between the foundation and disqualified persons (trustees, donors, etc.). Self-dealing violations carry significant excise tax penalties and can jeopardize your foundation's status.
990-PF Filing Obligations
Private foundations must file Form 990-PF annually with the IRS, detailing assets, income, distributions, and key transactions. This is your foundation's public record and a critical compliance requirement.
Investment Policies
A sound investment policy protects your foundation's assets and demonstrates prudent management to the IRS. Your policy should address asset allocation, risk tolerance, spending strategy, and conflict of interest.
Board Governance for Foundations
Private foundations need clear governance structures despite often having smaller boards than public charities. Board responsibilities include fiduciary oversight, investment decisions, grantmaking approval, and compliance.
Grantmaking Compliance
Every grant must include documentation (grant letter) that the recipient is a qualified organization and that the grant advances your exempt purpose. Poor grantmaking documentation can trigger IRS scrutiny.
Donor Intent and Mission Alignment
Your foundation's mission is defined by your donor's original intent — whether the founder is still living or has passed. Staying aligned with that intent is both a legal obligation and the core of responsible stewardship.
Frequently Asked Questions
I inherited a private foundation — what do I do first?
Start by understanding what you've inherited. Gather all foundation documents (articles, bylaws, board minutes, IRS determination letter, most recent 990-PF). Review the donor's intent and current assets. Then assess your foundation's governance structure, compliance status, and operational systems. A Foundation Transition Navigator can walk you through this systematically and help you identify any immediate issues that need attention.
What are the distribution requirements for private foundations?
Private foundations must distribute at least 5% of their average asset value annually for charitable purposes. This calculation is complex — it's based on a rolling five-year average of net asset value. Failing to meet the 5% threshold triggers a 30% excise tax on the shortfall. The distribution can be grants, foundation operating expenses, or a combination, but certain expenses don't count toward the requirement.
How much does it cost to manage a private foundation?
Costs depend on your foundation's size and complexity. Professional fees typically include accounting (Form 990-PF preparation), investment management (if applicable), legal counsel (for significant decisions or transitions), and governance/operational support. Our Foundation Governance Review ($2,000) gives you clarity on your current state and what support you actually need. Ongoing support ranges from hourly advisory calls ($275/hour) to a scalable management retainer (starting at $1,500/month) for hands-on operational management.
Can I pay myself from the foundation?
This is nuanced. You can pay reasonable compensation for actual services performed (e.g., if you serve as executive director or treasurer). However, compensation that's excessive or for services not actually provided triggers self-dealing penalties. Additionally, paying yourself or other family members counts against the 5% distribution requirement. The key is documentation: if you're paid, have a board resolution justifying the compensation as reasonable.
What's the difference between a private foundation and a public charity?
The main differences come down to funding sources, governance complexity, and regulatory burden. Private foundations are typically funded by a single source (a donor or family) and have more restrictive rules (5% distribution, excise taxes, self-dealing). Public charities have broader funding (diverse donors, earned income, etc.) and more flexibility. Most nonprofits are public charities. Private foundations often exist for restricted purposes like family giving or donor intent-driven grantmaking.
Do I need a lawyer to run a private foundation?
Not always. Many foundations operate successfully with operational and governance support from an experienced advisor paired with annual accounting and tax preparation. However, you should consult a lawyer for significant decisions: major governance changes, policy adoption, complex grants, conflict of interest situations, or if your foundation faces IRS scrutiny. We can help you navigate the operational and governance work — you'll know when legal counsel is necessary.
Foundation Resources
In-depth guides on the most common challenges foundation stewards face.
Inheriting a Private Foundation: What You Need to Know
A practical guide to excise tax traps, distribution requirements, and governance obligations for new foundation stewards.
Read more →Private Foundation Annual Compliance Checklist
Every filing deadline, distribution requirement, and governance task your foundation needs to complete each year.
Read more →Need a Partner for Your Foundation?
Whether you're stepping into a new role as foundation steward or looking to strengthen your foundation's governance and operations, we're here to help. Let's start with a conversation about where your foundation is and where you want to take it.