By Sandra J. Champion
In the United States, private foundations are mandated to distribute 5 percent of their fund’s annual monthly average to financially support public charities. The Internal Revenue Service (IRS) classifies both entities as 501c3 tax exempt organizations, but they are managed very differently.
Prior to 1969, private foundations fell under a great deal of public scrutiny for a variety of reasons. Most of those reasons centered around the assumption that wealthy families protected their financial assets from taxation by creating foundations that allowed their assets to grow in an exempt manner.
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