Private Foundation Payout Calculator

What the Private Foundation Payout Calculator does

US private non-operating foundations must make qualifying distributions roughly equal to 5% of the average value of their investment assets each year. The minimum investment return excludes a cash allowance (usually 1.5%) and is reduced by the excise tax on net investment income. Undistributed amounts must be paid out by the end of the following year.

It also works as a foundation payout rate calculator or a private foundation 5 percent rule calculator.

Formula

• Minimum investment return = 5% × (assets − debt) × (1 − cash allowance)
• Distributable amount = minimum investment return − excise tax
• Shortfall = distributable amount − qualifying distributions

Worked example

Using the starting values in the calculator above:

How to read the result

A shortfall must be distributed by the end of the next tax year to avoid an excise tax on undistributed income.

Investment management fees are not qualifying distributions; charitable administrative costs usually are.

Not tax advice. Distribution rules have detail and exceptions; confirm with your accountant and the Form 990-PF instructions.

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