In general, a private operating foundation (POF) is a private foundation that devotes most of its resources to the active conduct of its exempt activities. A private foundation may qualify for treatment as a private operating foundation. These foundations generally are still subject to the tax on net investment income and to the other requirements and restrictions that generally apply to private foundation activity. However, operating foundations are not subject to the excise tax on failure to distribute income. Also, contributions to private operating foundations described in Internal Revenue Code section 4942(j)(3) are deductible by the donors to the extent of 50 percent of the donor’s adjusted gross income (AGI), whereas contributions to all other private foundations (except those discussed under Private Pass-through Foundation) are generally limited to 30 percent of the donor’s adjusted gross income. In addition, a private operating foundation may receive qualifying distributions from a private foundation if the private foundation does not control it. Note: The 50 percent limit for contributions to a POF was temporarily raised to 60% of AGI for cash contributions through taxable years beginning before January 1, 2026 as part of the Tax Cuts and Jobs Act of 2017 and was increased to 100% of AGI for cash contributions in 2020 and 2021 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Additional information Determination of compliance with operating foundation tests Private operating foundation classification - new organizations Deductibility of grants or contributions to operating foundation after change in status Private operating foundation - statement required in exemption application Return to Life Cycle of a Private Foundation
