But there are three crucial elements that distinguish public foundations, such as NHF, from their private counterparts. Reporting Requirements Not only are private foundation reports more extensive, they are less protected by privacy laws. Once this type of information falls into a state's domain, it is accessible by both the media and the general public. If there is any question of asset control the IRS scrutinizes the operating history of the private foundation. With the exception of a few publicly traded stocks, the deductibility of gifts to a private foundation is limited to the cost basis.
Violators face possible taxes and penalties.
A private foundation faces taxes and penalties on any investment that jeopardizes its charitable purpose, including any bad business decision. There is no requirement to distribute annually a certain percentage of the assets. There is no investment tax-penalty risk. There is no income tax on your donation annually. There are no cumbersome reporting requirements.