How much money must a private foundation give away each year?
In keeping with Internal Revenue Code rules, the foundation is required to distribute approximately 5% of the average fair market value of its assets each year. Qualifying distributions meeting this requirement include grants and certain operating expenses. The Internal Revenue Code imposes penalties in the form of an excise tax on the foundation if it fails to make qualifying distributions within 12 months after the close of the tax year. Fidelity Private Foundation Services will calculate and report the foundation’s progress against the IRS-required minimum annual 5% distribution of foundation assets throughout the year. In addition, in order to avoid inadvertent noncompliance and penalties, Fidelity Private Foundation Services lets a foundation designate a charitable organization that will automatically receive an amount equal to any shortfall in the required distribution at the end of the year. If a foundation inadvertently fails to direct sufficient grant distributions to meet the
