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Private Foundations

Lathrop Gage has substantial experience advising private foundations in the navigation of nonprofit entity and charitable status issues and the special private foundation excise tax provisions in the tax law.

We regularly advise foundations regarding the following: 

  • Structure (establishing an endowment or permitting the expenditure of both principal and earnings)
  • Advice regarding choice of entity (nonprofit corporation or charitable trust)
  • Assistance in organizing the foundation
  • Assistance in obtaining recognition from the Internal Revenue Service of the foundation’s tax-exempt status 
  • General advice regarding operating the foundation to avoid private foundation excise taxes

We also routinely assist families with charitable and business planning, which often leads to the formation of private foundations.  We also are privileged to represent several large foundations that intend to operate in perpetuity for the benefit of the charitable classes and geographic regions that they serve. 

Representative Experience:

  • Obtained a ruling from the IRS that permitted a private foundation to invest its assets in investment partnerships sponsored by members of a family, all of whom were disqualified persons with respect to the foundation.  This was the first ruling issued by the IRS which directly and unequivocally permitted
    such co-investments.
  • Obtained a private letter ruling from the IRS that permitted a significant St. Louis-based foundation to make payments to young people who participated in the foundation’s conferences and other programs without running afoul of the taxable expenditure rules (a difficult ruling to obtain because of the rules that generally prohibit making grants to individuals for travel, study, or other similar purposes.)
  • Obtained a ruling from the IRS on behalf of two leading private foundations that permitted them to provide critical private sector support for the new Kansas City Public Library. The transactions approved by the IRS were complicated due to multiple layers of financing, concerns about benefit to private investors, the foundations’ utilization of the services of the community foundation and other factors.
  • Represent a nonprofit educational foundation in corporate governance and employment matters as well as in connection with an IRS private letter ruling request.
  • Represent a nonprofit health care foundation in connection with issues relating to governance, tax status, formation of a subsidiary, service and employment agreements.
  • Act as general counsel for the foundation of a major university. Oversee all matters including an emphasis on real estate acquisitions and sales.

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