A Private Foundation (“PF”) is a charitable organization generally supported by only a few donors and exists to make grants (gifts) to qualifying public charities. Donors who make gifts to a PF receive a full income tax deduction for making such a gift (with certain limitations, based upon a taxpayer’s adjusted gross income, as to the amount that can be deducted annually). Most PF’s are 501(c)(3) organizations, thus exempt from federal income tax.

Unlike CRTs and CLTs, there is no income stream paid to a beneficiary by a PF. The purpose of the PF is to operate for the benefit of charitable organizations. Therefore, once an asset is given to the PF by a donor, the gift is complete and the donor will receive no future monetary benefit from that asset. Each year a PF is required to make annual gifts to qualified public charities from PF assets.