Lesson · Facts First
Private Family Foundations
A private foundation is a funded, family-run charity - maximum control, real compliance weight, and deduction limits that surprise people.
The facts
- 01Cash contributions to a private foundation deduct up to 30% of adjusted gross income (appreciated stock 20%) versus 60%/30% for public charities - IRC 170(b).
- 02The foundation must distribute roughly 5% of net investment assets annually (payout rule, IRC 4942).
- 03Self-dealing rules (IRC 4941) are strict: no loans, sales, or leases between the foundation and family - penalties, not just disallowance.
- 04For most families a Donor Advised Fund gives similar giving power with public-charity deduction rates and none of the excise-tax regime - foundations earn their keep at serious scale.
Sources
- IRC Sections 170(b), 4941, 4942
- IRS: Private Foundations guidance
Educational content only — not tax, legal, investment, or VA-benefits advice. Figures verified against the cited sources for 2026; confirm your own situation with a qualified professional before acting.
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