A Complete Guide for Private Foundations

What the Form Is For

Form 990-PF is the annual tax return that private foundations must file with the Internal Revenue Service. Think of it as your foundation's yearly check-in with the IRS. This form serves two essential purposes: calculating any excise tax you owe on investment income, and reporting all your charitable activities, distributions, and grant-making to demonstrate you're operating properly as a tax-exempt organization.

Private foundations are charitable organizations funded typically by a single source—like a family, individual, or corporation—rather than receiving broad public support. Unlike public charities that depend on ongoing donations from many donors, private foundations usually have an endowment that generates investment income used for charitable purposes. The IRS requires detailed annual reporting to ensure these foundations follow strict rules about how they spend money, who they give grants to, and how they manage their assets.

Form 990-PF also serves as a public document. Anyone can request to see your foundation's return, which promotes transparency and accountability in the charitable sector. This public disclosure helps donors, researchers, and regulators understand how private foundations operate and ensures charitable dollars are used appropriately.

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When You’d Use Form 990-PF

Filing Late or Amended Returns

Standard Filing Deadline

You must file Form 990-PF by the 15th day of the 5th month after your accounting period ends. For foundations operating on a calendar year (January through December), this means your 2011 return is due May 15, 2012. If that date falls on a weekend or holiday, you file the next business day.

Late Returns

If you miss the deadline, you should still file as soon as possible and attach a written explanation of why you're filing late. The IRS assesses daily penalties for late filing, so prompt action minimizes these costs. If you filed late without requesting an extension, your explanation might help the IRS waive penalties if you had reasonable cause—such as a natural disaster, serious illness, or unavoidable absence of key personnel.

Amended Returns

Sometimes you need to correct or change information after filing your original return. To file an amended return, complete a new Form 990-PF with all the correct information (not just the changes) and check the “Amended Return” box in Section G at the top of page 1. Common reasons for amendments include discovering mathematical errors, receiving corrected financial statements, or realizing you omitted required schedules.
If you're claiming a refund of excise tax paid, you must file the amended return within 3 years of the original filing date or 2 years from when you paid the tax—whichever is later.

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Key Rules for 2011

Several important rules applied specifically to the 2011 tax year:

Electronic Payment Requirement

Starting January 1, 2011, all private foundations must pay their excise taxes electronically using the Electronic Federal Tax Payment System (EFTPS). Paper deposit coupons (Forms 8109 and 8109-B) were no longer accepted after December 31, 2010. Foundations needed to enroll in EFTPS by visiting www.eftps.gov or calling 1-800-555-4477.

Mandatory E-Filing

If your foundation files 250 or more returns during the calendar year (including all forms like W-2s, 1099s, and other information returns—not just Form 990-PF), you must file Form 990-PF electronically. Failing to e-file when required means the IRS considers your return not filed at all.

Three-Year Rule

For tax years beginning after 2006, the IRS implemented an automatic revocation policy. If your foundation fails to file Form 990-PF for three consecutive years, you automatically lose tax-exempt status. The IRS began processing these automatic revocations in 2011, so foundations that didn't file for 2008, 2009, and 2010 lost their exemption.
This is serious—losing exemption means paying income taxes and going through a lengthy reinstatement process.

Health Insurance Credit

The 2011 form reflected changes from the Affordable Care Act. If your foundation qualified for the small employer health insurance premium credit, you had to claim it on Form 990-T (the unrelated business income tax return), not on Form 990-PF.

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Step-by-Step (High-Level Overview)

While Form 990-PF contains 17 parts, here's a simplified roadmap to completing it:

Step 1: Gather Information

Collect your financial statements, grant records, investment information, and details about officers, directors, and highly compensated employees.

Step 2: Complete the Header

Fill in basic information like your foundation's name, address, EIN (Employer Identification Number), and accounting period.

Step 3: Balance Sheet (Part II)

Report your assets, liabilities, and net assets at the beginning and end of the year. If your foundation had $5,000 or more in assets at any time during the year, you must complete all columns.

Step 4: Revenue and Expenses (Part I)

Report all income (contributions, investment income) and expenses (grants made, operating costs, professional fees). This is where you calculate whether you have net income or loss.

Step 5: Calculate Excise Tax (Parts IV–VI)

Figure the tax on your net investment income. Most foundations pay either 1% or 2% of net investment income, depending on their grant-making history.

Step 6: Report Distributions (Part XII)

Detail all qualifying distributions—the grants and charitable expenditures that satisfy your annual distribution requirement (generally 5% of investment assets).

Step 7: Answer Questions (Part VII-A and VII-B)

Respond to yes/no questions about your activities, self-dealing transactions, excess business holdings, and other compliance matters.

Step 8: Complete Required Schedules

Attach Schedule B (listing contributors, if applicable) and provide supplementary information in Part XV about grants and contributions made.

Step 9: Sign and File

An authorized officer must sign the return. Mail it to the IRS center in Ogden, Utah, or file electronically if required.

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Common Mistakes and How to Avoid Them

Incomplete Returns

The #1 error is leaving questions unanswered or lines blank. Every question must be answered with “Yes,” “No,” or “N/A” (not applicable). Every total line needs an entry—even if it's zero. If an entire part doesn't apply, write “N/A” or “None.” Incomplete returns are treated the same as late returns, triggering penalties.

Missing Schedule B

All foundations must either complete Schedule B (showing contributors) or check the box on line 2 certifying that Schedule B isn't required. Forgetting this is one of the most common errors.

Including Personal Information

Don't include Social Security numbers, bank account numbers, or other sensitive personal information about grantees or individuals. This exposes people to identity theft risk and violates IRS guidance.

Reporting Donated Services

Don't report the value of volunteer time, donated use of facilities, or free equipment as contributions received. Only actual cash and property contributions should be reported.

Wrong Accounting Method

Most of the form uses your regular accounting method (cash or accrual), but Part I, column (d) must use the cash method. Mixing these up causes errors.

Missing Part XV

If your foundation had $5,000 or more in assets at any time during the year, you must complete Part XV (Supplementary Information), describing each grant made and its purpose.

No Signature

Returns without an authorized officer's signature are invalid. The signer must be the president, vice president, treasurer, or another authorized corporate officer.

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What Happens After You File

Processing

The IRS processes your return and enters it into their database. Your Form 990-PF becomes part of the public record that anyone can request and view.

Public Disclosure

Your foundation must make copies of your three most recent Forms 990-PF available for public inspection. You must provide copies to anyone who requests them—either in person at your office or by mail. You can charge reasonable copying and postage fees. Many foundations post their returns on their websites to reduce administrative burden.

State Reporting

You must also send a copy of Form 990-PF to the attorney general in:

1. Each state where you solicit contributions
2. Your state of incorporation
3. The state where your principal office is located

This should be done at the same time you file with the IRS.

IRS Review

The IRS may select your return for review or examination. If they have questions, they'll send a notice. Respond promptly with requested information to avoid additional penalties.

Tax Payment

If you owe excise tax (shown on Part VI), you must pay electronically through EFTPS by the due date. Unpaid taxes accrue interest and penalties at 0.5% per month, up to 25% of the unpaid amount.

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FAQs

1. Do I need to file Form 990-PF if my foundation had no activity this year?

Yes. All private foundations must file annually, regardless of whether they received income, made grants, or had any activity. There's no minimum income threshold that exempts you from filing.

2. What's the penalty for filing late?

Small foundations pay $20 per day the return is late, up to a maximum of $10,000 or 5% of gross receipts (whichever is smaller). Large foundations (gross receipts over $1 million) pay $100 per day, up to $50,000. Filing three years late means automatic loss of tax-exempt status.

3. Can I get an extension to file?

Yes. File Form 8868 to request an automatic 3-month extension, and pay any estimated tax due by the original deadline. If you need even more time, use Form 8868 again to request an additional (non-automatic) 3-month extension, but you must show reasonable cause.

4. What's the excise tax rate on investment income?

Most private foundations pay 2% of net investment income. However, if your foundation has increased its qualifying distributions compared to previous years, you may qualify for a reduced 1% rate.

5. Do foreign foundations have to file Form 990-PF?

Foreign private foundations that receive U.S.-source income must file. However, certain parts of the form don't apply to foreign organizations, particularly those that have received at least 85% of their support from non-U.S. sources since creation.

6. How do I get copies of old returns?

Use Form 4506 to request copies from the IRS. There’s a fee for each return copy.

7. What if I made a mistake on my return?

File an amended return as soon as you discover the error. Complete a new Form 990-PF with all correct information (not just corrections), check the “Amended Return” box, and file it with the same IRS center. Include an explanation of what changed and why.