| Answer: |
The private foundation faces many constraints not faced by their public counterparts.
For instance, a private foundation must distribute at least 5% of the fair market value of its
assets annually. Failure to do so results in a 15% tax on undistributed income. Private foundation
regulations identify a disqualified person, and they restrict her ability to own stock in a
corporation whose stock is also owned by the private foundation. In addition, a private
foundation faces taxes and penalties on any investment that jeopardizes its charitable
purpose. Public charities are given more freedom to engage in some lobbying activities;
private foundations are subject to punitive excise tax penalties if they engage in any lobbying.
Both types however, face an outright ban on political campaigning. |
