Misconceptions Regarding Private Non-Operating FoundationsMisconceptions Regarding Private Non-Operating Foundations

The pandemic has prompted an increased focus on charitable giving. In an effort to encourage donations, recent stimulus legislation made cash gifts to many public charities fully deductible for income tax purposes—but notably excluded contributions to donor-advised funds (DAFs). Notwithstanding this incentive, many large donors will likely continue to provide philanthropic support indirectly through grantmaking (that is, non-operating) private family foundations (PFFs) or DAFs rather than directly to traditional public charities because these vehicles enable donors to obtain an upfront income tax charitable deduction in one year for contributions that may be distributed to charity over a period of years.  

Generally speaking, a donor’s fa...