---
title: "What Is private foundation? | Seek First Glossary"
description: "A private foundation is a charitable organization, often funded and controlled by one family."
url: https://seekfirst.multisites.ai/glossary/private-foundation
publisher: Seek First
phone: +1-866-398-4044
contact: https://seekfirst.multisites.ai/contact
---

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Giving

# private foundation

A private foundation is a charitable organization, often funded and controlled by one family. It must file a yearly return, pays an excise tax on most investment income, and follows added IRS rules.

A **private foundation** is a 501(c)(3) charity that does not qualify as a public charity. Families often form one to control how their giving is invested and granted. The IRS says every 501(c)(3) organization is a private foundation unless it falls into an excluded category, such as a hospital or university, or one with broad public support.

The rules are heavier than for a donor-advised fund. A private foundation must file Form 990-PF every year, and the IRS says there is an excise tax on the net investment income of most domestic private foundations. There are also limits on self-dealing and rules that require the foundation to give for charitable purposes each year.

**For example:** a family funds a foundation with $2 million. A family member sits on the board and picks grants. The foundation files its return, keeps its own records and follows the self-dealing rules. If a family member takes a salary or loan from it, that can trigger penalties.

Why it matters: you get control, and you also take on cost and compliance. Many families first compare it with a donor-advised fund.

Read our [comparison of a donor-advised fund and a private foundation](https://seekfirst.multisites.ai/compare/donor-advised-fund-vs-private-foundation).

[Read nextCharitable giving strategy: how to give more on purpose and pay less tax doing it](https://seekfirst.multisites.ai/charitable-giving-strategy)

## Related terms

-   [donor-advised fund](https://seekfirst.multisites.ai/glossary/donor-advised-fund)
-   [charitable remainder trust](https://seekfirst.multisites.ai/glossary/charitable-remainder-trust)
-   [stewardship](https://seekfirst.multisites.ai/glossary/stewardship)

## Sources

1.  [IRS: Private foundations](https://www.irs.gov/charities-non-profits/charitable-organizations/private-foundations)
2.  [IRS: Private foundations](https://www.irs.gov/charities-non-profits/charitable-organizations/private-foundations)

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