How the Rich Reap Huge Tax Breaks From Private Nonprofits - ProPublica

(Summary via Kagi)

• Some wealthy donors are obtaining large tax deductions by donating assets to their private foundations, but then failing to provide adequate public access to those assets as required.

• Private foundations are funded by a single donor or family who retain control, and there is little oversight to ensure they provide a public benefit as promised.

• The rules defining what qualifies as a “public benefit” are vague, and IRS enforcement has been lax due to budget cuts.

• Some donors have used their foundations to purchase homes for personal use, which experts say violates self-dealing rules.

• Donors can obtain large tax deductions by donating valuable assets like real estate and art to their foundations.

• Some foundations provide very limited public access to the donated assets, like only offering a few tours per year with advance reservations.

• Some donors claim they will open donated assets like museums to the public, but then fail to do so after receiving tax benefits.

• The IRS has struggled to crack down on abusive foundations due to lack of resources and political pressure.

• Experts say the issue of ensuring adequate public access for foundation assets has been controversial in the past but led to few meaningful changes.

• Some donors plan to eventually donate foundation assets to public institutions, but retain control for many years while enjoying tax benefits.