A private foundation cannot be tax-exempt and contributions to it will not be deductible as charitable contributions unless its organizing document contains special provisions in addition to those that generally apply to section 501(c)(3) organizations. These special provisions, generally, must require or prohibit, as the case may be, the foundation to act or refrain from acting so that it will not be liable for the private foundation excise taxes imposed by sections 4941, 4942, 4943, 4944, and 4945. Specific reference to these sections generally must be included in the organizing document, unless equivalent language is used that is considered by the IRS to have the same full force and effect.
A private foundation's organizing document will be considered to have been amended to conform to this requirement if valid provisions of state law have been enacted that:
- Require the foundation to act or refrain from acting so that it will not be liable for any of the taxes imposed on the prohibited transactions discussed later, or
- Treat the required provisions as though they were contained in the foundation's organizing document.
The IRS periodically updates a published list of states with these statutes.
Apart from these required provisions, state law governs filing requirements for and the contents of organizing documents.