Private Foundations: Tax Law and Compliance, 4th Edition

Chapter SeventeenCorporate Foundations¹

1. § 17.1 Corporate Foundation Overview
2. § 17.2 Reasons for Establishment of a Corporate Foundation
3. § 17.3 Private Inurement Doctrine
4. § 17.4 Disqualified Persons Rules
5. § 17.5 Self-Dealing Rules
   1. (a) Payment of Compensation and Reimbursements
   2. (b) Sharing of Facilities
   3. (c) Provision of Tangible Benefits
   4. (d) Grant-Making
   5. (e) Incidental and Tenuous Benefits
   6. (f) Corporate Reorganizations and Stock Transfers
6. § 17.6 Other Private Foundations Rules
   1. (a) Mandatory Payout Rules
   2. (b) Excess Business Holdings Rules
   3. (c) Jeopardizing Investments Rules
   4. (d) Taxable Expenditures Rules
   5. (e) Economic Returns

Tax-exempt charitable organizations that are affiliated with for-profit corporations, and usually controlled by them, are almost always private foundations (generically, corporate foundations). This private foundation status arises, in large part, because the related for-profit corporation typically is the sole funder of the corporate foundation.

§ 17.1 Corporate Foundation Overview

Among the four features of a conventional private foundation is the characteristic that it is funded from one source.² Because the typical foundation related to a for-profit business is financially supported only by that business entity, the corporate foundation usually is a private foundation. It is possible for a charitable organization that is controlled by a for-profit entity to be a public charity—most likely, a donative-type publicly supported organization³—but these ...