Foundations
Form 990-PF preparation, distribution planning, and audits for private and family foundations that want their grantmaking supported by clean books.
Overview
Private and family foundations operate under a set of federal rules that public charities do not face. They pay an excise tax on net investment income, must meet an annual minimum distribution requirement, and are subject to strict rules on self-dealing between the foundation and its insiders. Each year these issues come together on Form 990-PF, a public return that shows the foundation’s assets, grants, and compliance. Pease Bell helps foundations prepare that return, track the numbers behind it, and keep records that support it.
Our work with foundations includes Form 990-PF preparation, distribution tracking, excise tax calculations, and financial statement audits for foundations that need them for their boards or by their own governing documents. We also coordinate with family members, trustees, and investment advisors so that investment reporting, grant activity, and administrative expenses are recorded consistently. The aim is to give foundation leaders a clear view of where the foundation stands each year.
How We Help Foundations
Form 990-PF Preparation
Preparation and review of the annual Form 990-PF, including investment income, grants paid, qualifying distributions, and the supporting schedules that make the public return accurate and complete.
Excise Tax Calculations
Calculation of the excise tax on net investment income, including review of dividends, interest, and capital gains reported by custodians, and planning for estimated tax payments.
Minimum Distribution Tracking
Tracking of the minimum distribution requirement under IRC Section 4942, including asset valuation, qualifying distributions, and carryovers, so grant budgets are set with the requirement in view.
Self-Dealing Awareness
Help identifying transactions between the foundation and disqualified persons that may raise self-dealing concerns under IRC Section 4941, so issues are flagged for counsel before they occur.
Foundation Audits
Financial statement audits and reviews for foundations whose boards, governing documents, or state requirements call for independent assurance over investments, grants payable, and administrative expenses.
Grant and Investment Records
Accounting support that reconciles investment statements, grant commitments, and administrative expenses so trustees and family members receive consistent, timely reporting throughout the year rather than only at tax time.
Challenges We Help Foundations Address
- ✓Meeting the annual minimum distribution requirement without over-granting
- ✓Reconciling custodian investment reports to the foundation’s books
- ✓Spotting potential self-dealing in family and insider transactions
- ✓Calculating excise tax and estimated payments correctly
- ✓Keeping a public Form 990-PF accurate and consistent year to year
Frequently Asked Questions
What is Form 990-PF?
Form 990-PF is the annual information return private foundations file with the IRS. It reports the foundation’s assets, investment income, expenses, grants, and the calculations for its excise tax and minimum distribution requirement. The return is publicly available, so accuracy matters. Pease Bell prepares and reviews Form 990-PF for private and family foundations.
What is the minimum distribution requirement for private foundations?
Under IRC Section 4942, most private non-operating foundations must make qualifying distributions each year at least equal to a required amount, generally 5 percent of the average fair market value of their non-charitable-use assets. Shortfalls can lead to excise taxes. We help foundations value assets, track qualifying distributions, and plan grants with this requirement in mind.
Do private foundations pay tax on investment income?
Yes. Private foundations generally pay a federal excise tax on their net investment income, which includes interest, dividends, rents, royalties, and net capital gains, less allowable expenses. The tax is reported on Form 990-PF, and foundations may need to make estimated payments. We calculate the tax and help plan payments during the year.
What is self-dealing for a private foundation?
Self-dealing refers to certain transactions between a private foundation and disqualified persons, such as substantial contributors, foundation managers, and their family members. Examples include sales, leases, loans, and some payments of compensation. IRC Section 4941 imposes excise taxes on these acts. We help foundations identify potential issues so they can consult legal counsel early.
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