S. 1981 Provides a Small Carrot for Private Foundations

The Bill Would Exempt a Private Foundation From the Excise Tax on Investment Income in a Taxable Year Under Two Scenarios


S. 1981 does provide a small “carrot” for private foundations by creating an exemption for private foundations from the excise tax on investment income in a taxable year.

  • If the foundation distributes at least 7% of its assets; or
  • If the foundation is created for a term of no longer than 25 years and the foundation does not distribute funds to another disqualified (related) foundation.


  • While this exemption is a positive for private foundations that choose to distribute funds faster than required, the punitive provisions through the legislation far outweigh the benefit of this one component.