A Private Foundation (“PF”) is a charitable
organization generally supported by only a few donors and
exists to make grants (gifts) to qualifying public charities.
Donors who make gifts to a PF receive a full income tax deduction
for making such a gift (with certain limitations, based upon
a taxpayer’s adjusted gross income, as to the amount
that can be deducted annually). Most PF’s are 501(c)(3)
organizations, thus exempt from federal income tax.
Unlike CRTs and CLTs, there is no income stream paid to a
beneficiary by a PF. The purpose of the PF is to operate for
the benefit of charitable organizations. Therefore, once an
asset is given to the PF by a donor, the gift is complete
and the donor will receive no future monetary benefit from
that asset. Each year a PF is required to make annual gifts
to qualified public charities from PF assets.