Private Foundations in New York & New Jersey
At Abelaj Law, P.C., we help donors, families, and foundation leaders build and steward private foundations throughout their lifecycle.
A private foundation can be a powerful way to formalize charitable giving, involve family members across generations, and support the people and causes you care about.
For many donors, it’s also part of a larger legacy plan coordinated with wills, trusts, and lifetime gifting.
Our firm, led by attorney and CPA Jennifer V. Abelaj, guides donors and families in New York and New Jersey on establishing and administering private foundations with careful attention to governance, tax compliance, and long-term stewardship.
A private foundation can be an effective structure for organized giving, whether you’re establishing a new foundation, joining an existing board, or leading day-to-day operations as an executive or trustee.
For some, a foundation is a family legacy vehicle; for others, it is an established institution that needs steady governance, clear grantmaking procedures, and reliable compliance year after year. Whichever path your generosity takes, we’re here to help.
What We Do
We counsel donors, families, and foundation leaders on establishing and administering private foundations. We also counsel nonprofits receiving funding from private foundations.
Private foundations require careful attention to governance, tax compliance, and long-term stewardship.
That includes helping you evaluate whether a private foundation is the right charitable vehicle, forming the entity, securing tax-exempt status, preparing governance documents, and annual Form 990-PF filings.
Because private foundations are often closely connected to family leadership and family assets, we focus on the real-world decisions that create risk: insider transactions, compensation, grant procedures, and recordkeeping.
When a foundation is part of your estate plan—whether funded during life or at death—we coordinate the foundation plan with wills and trusts so your charitable intent is clear and your fiduciaries can execute your mission.
Who This Work Is For
Our clients are often:
Individuals and families in New York and New Jersey building a long-term giving strategy
Donors who want to involve children or other relatives in philanthropy with clear guardrails
Families using a private foundation as part of an estate plan or legacy plan
Existing charitable organizations navigating whether they are (or may become) treated as a private foundation for federal tax purposes
Boards and executives who need ongoing counsel on grants, governance, and compliance
Whether you’re creating or managing a private foundation, we can help you build a structure and roadmap that supports your charitable goals and reduces avoidable risk.
Contact Us Today
We’re here to support your private foundation, whether you are just getting started or looking for guidance as you grow.
Our Approach to Counseling Clients on Nonprofit Formation and Governance
Private foundations are often considered difficult due to strict IRS compliance regulations and administrative burdens. The rules are very specific, so small process gaps can become significant tax problems. Jennifer’s unique attorney-and-CPA background gives clients confidence to make decisions informed by both legal and tax-related perspectives.
We also help you plan for the foundation’s real-life operations: who makes decisions, how decisions are documented, how grants are evaluated, and what activities should be avoided altogether.
A private foundation involves recurring tax filings, excise tax exposure, and payout planning—alongside governance that must work in practice, not just on paper. We coordinate with your accountant, investment advisors, and other professionals so the legal structure, grantmaking plan, and annual reporting posture are aligned.
We also bring an estate-planning lens to foundation work. If your foundation will be funded through a will or trust, or you are weighing it against other charitable giving strategies, we help you design a plan that fits your broader legacy goals—so the charitable plan does not live in a silo.
Key Services for Private Foundations
Advising on whether a private foundation is the right vehicle and how it compares to alternatives
Formation and governance: organizational documents, bylaws/policies, and board procedures
Conflict-of-interest planning and related-party transaction review (including self-dealing sensitivity)
Grantmaking counsel, including procedures for higher-risk grants (such as grants to individuals)
Minimum distribution (payout) planning and compliance guidance
Excise-tax and reporting counsel, including net investment income tax and annual Form 990-PF posture
Coordinating private foundation planning with wills, trusts, and planned-giving strategies
A well-run private foundation should feel like an extension of your charitable intent — not an ongoing compliance fire drill.
Risks of DIY or Inexperienced Counsel
Even when everyone is acting in good faith, foundations built on templates and “handed-down” family practices often run afoul of the relevant IRS rules.
For example:
A “fair” insider deal that is still prohibited
Private foundations have strict rules around transactions with “disqualified persons,” which can include substantial contributors, foundation managers, and certain family members. A transaction that feels reasonable in a family context can still be treated as self-dealing and trigger excise taxes.
Grants made without an approved procedure
Certain grants—particularly grants to individuals for travel, study, or similar purposes—can be treated as taxable expenditures unless a compliant procedure is in place. In some cases, we may need to seek the IRS’ advance approval.
How Counsel Adds Value
- Clear decision-making and documentation that holds up over time and through leadership changes
- Conflict-of-interest safeguards that protect the foundation and the people serving it (including New York requirements where applicable)
- Tax posture and compliance rhythm aligned with annual Form 990-PF reporting and excise-tax planning
- Practical grantmaking guidance so grants are structured and recorded to minimize avoidable risk
- Estate-planning integration so funding, administration, and successor roles are clear for family members and fiduciaries
Frequently Asked Questions
What is the difference between a private foundation and a public charity?
Most 501(c)(3) organizations are classified as private foundations unless they qualify as a public charity under a public support test or another exception. Private foundations are subject to the excise-tax rules in Chapter 42, including rules on self-dealing, minimum distributions, and taxable expenditures.
Do Private Foundations have unique tax filing obligations?
Yes. Private foundations must file Form 990-PF annually, regardless of size. Private foundations have technical tax calculations and are subject to broader public disclosure rules, as identities of contributors to a private foundation are not exempt from disclosure.
What is the excise tax on net investment income?
Section 4940 imposes an excise tax on the net investment income of most domestic tax-exempt private foundations at a rate of 1.39%.
What is the payout requirement, and what happens if we miss it?
Private foundations generally must meet a minimum distribution requirement each year under Section 4942. (IRS) Failure to distribute the required amount, which is approximately 5% of asset value, can trigger excise taxes, including a tax on undistributed income and additional taxes if not corrected.
Who is a “disqualified person”?
For private foundation excise-tax purposes, the category can include substantial contributors, foundation managers, certain owners of related entities, and family members of those individuals.
Can a private foundation be part of my estate plan?
Yes. A foundation can be funded during life, through a will or trust, or in combination with other planned-giving strategies. We regularly help clients evaluate whether a private foundation fits their broader estate plan and charitable goals—and then coordinate the foundation plan with the estate-planning documents so implementation is clear.
Schedule a Consultation
If you are considering a private foundation—or you already manage one and want clearer governance and compliance—we invite you to request a consultation. We serve clients across New York and New Jersey, including families integrating philanthropy into broader estate and legacy planning.
Or call us at: 212-328-9568