A private operating foundation is not subject to the tax on net investment income if it is an exempt operating foundation. In addition, private foundations may make grants to exempt operating foundations without complying with the expenditure responsibility requirements. In general, an exempt operating foundation is a private foundation that has been publicly supported for 10 years; whose governing body consists of individuals less than 25 percent of whom are disqualified individuals and is broadly representative of the general public; and has no officer who is a disqualified individual during the year. Return to Life Cycle of a Private Foundation
