Renewed Push for Universal Charitable Deduction
14 Mar 2023
Private Operating Foundation Exempt Under 501(c)(3)
Private operating foundations run their own programs while meeting IRS tests to maintain exempt status and maximize philanthropic impact.
Unlike grantmaking foundations, these organizations directly run their own charitable programs while still enjoying the tax benefits of private foundation status. Because they straddle the line between traditional foundations and public charities, operating foundations face unique qualification tests, reporting obligations, and governance challenges. At For Purpose Law Group (FPLG), we provide specialized legal counsel to help operating foundations maintain compliance, protect donor intent, and maximize their impact.
Formation & Structuring
Establishing a private operating foundation requires strategic foresight. FPLG helps founders determine whether operating foundation status is the right fit, prepare governing documents, and secure IRS recognition. We also advise on structuring bylaws, drafting charitable purpose statements, and ensuring that planned activities align with IRS definitions of direct charitable work.
Qualification & Compliance Tests
Operating foundations must meet one of three IRS tests each year—the assets test, endowment test, or support test—to maintain their status. FPLG guides clients through these complex rules, provides ongoing monitoring, and ensures that annual operations and reporting demonstrate compliance. By staying proactive, we help foundations avoid costly reclassification or penalties.
Governance & Fiduciary Oversight
Because operating foundations both fund and implement programs, governance requires careful attention. FPLG advises boards on fiduciary duties, conflict-of-interest policies, and oversight of staff-led programs. We also provide training and governance structures to reduce risks of self-dealing and ensure alignment between philanthropic goals and legal responsibilities.
Program Operations & Risk Management
Operating foundations often engage directly in activities such as research, education, or community programs. FPLG provides counsel on contracts, employment matters, and liability risks associated with operating charitable projects. We also support foundations in documenting program outcomes, maintaining compliance with grant agreements, and demonstrating public benefit. With our guidance, operating foundations can focus on delivering impact while protecting their tax status and reputation.
Why Clients Choose FPLG
Our Mission
FPLG's mission is to empower changemakers by providing team-based, client-focused, and proactive legal expertise—delivering the counsel leaders need to build strong, compliant, and resilient organizations.
Our Vision
To ensure every nonprofit leader in the United States is supported by expert, values-driven counsel—equipping them to lead with confidence, sustain their organizations, and maximize their impact. By equipping leaders to govern with confidence, sustain healthy organizations, and maximize their impact, we envision a sector where purpose-driven work thrives and communities flourish.
Our Values
We are defined by six core values that guide every client relationship: Proactive Resourcefulness, Compassionate Communication, Uncompromising Authenticity, Unapologetic Expertise, Building Community, and Inclusive Teamwork. Together, these principles shape how we serve nonprofit leaders—combining excellence with purpose to strengthen organizations and amplify impact.
