What is a private family foundation?
A private family foundation is defined as an entity that is established as a nonprofit corporation or charitable trust, with a principal purpose of making grants to unrelated organizations or institutions or to individuals for scientific, educational, cultural, religious, or other charitable purposes. The most common distinguishing characteristic of a private foundation is that most of its funds come from one source, whether an individual, a family, or a corporation. Private family foundations are also identified by their formal determination letter. The tax laws for a private family foundation include a minimum distribution requirement, an excise tax on investment income, and a limit as to the proportion of for-profit enterprise they may own. Private family foundations must make “qualifying distributions” of at least 5 percent of the average market value of their investment assets in any given fiscal year by the end of the following year. The excise tax, normally 2 percent of net inve
