KPMG report: Tax proposals for private foundations in Biden Administration’s FY24 budget

Two proposals relating to private foundations were included in the Green Book.

Two proposals relating to private foundations were included in the Green Book.

Article Posted date 15 March 2023

The U.S. Treasury Department on March 9, 2023, released its “General Explanations of the Administration’s Fiscal Year 2024 Revenue Proposals” (the “Green Book”). These revenue proposals are contained in the president’s FY 2024 budget recommendations transmitted to Congress the same day.

Two proposals relating to private foundations were included in the Green Book.

Proposals related to private foundations

Private foundation contributions to donor advised funds not qualifying distributions

The proposal provides that a private foundation distribution to a donor advised fund (DAF) would not be a qualifying distribution unless:

  • The DAF distributes the funds by the end of the following tax year as a qualifying distribution
  • The private foundation maintains records or other evidence confirming that the DAF distributed the funds as qualifying distributions within the required time

Currently, private non-operating foundations generally must distribute 5% of their non-charitable use assets annually (the “5% payout), but they cannot count amounts distributed to a related entity or another private non-operating foundation toward this 5% payout unless the funds are in turn distributed by the end of the following tax year as qualifying distributions. The proposal would effectively treat distributions by private foundations to DAFs the same as distributions to other private non-operating foundations.

The proposal states that it would be effective after the date of enactment.

Exclude payments to disqualified persons from counting toward private foundation payout requirement

The proposal provides that a private foundation’s payment of compensation or reimbursements of expenses to certain “disqualified persons” (namely, substantial contributors, their family members, and certain entities owned by them) would not be a qualifying distribution that would count toward the foundation’s 5% payout.

The proposal would be effective for payments made and expenses reimbursed after the date of enactment


For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Ruth Madrigal | ruthmadrigal@kpmg.com

Preston Quesenberry | pquesenberry@kpmg.com

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