Day 05
Josh Stamer
Expert Tip: Use Expenses To Meet Your Minimum Distribution Requirement
Did you know that foundations can use charitable expenses to fulfill their 5% minimum distribution requirement (MDR)?
This time of year, foundations are often focused on meeting their MDR, and we are often reminding our clients that the MDR is not strictly a grantmaking requirement. As long as they are done in good compliance, foundations can use expenses to fulfill their MDR.
“Expenses” can carry a negative reputation, since most philanthropists want their charitable dollars to be granted directly to social issues and causes that are important to them; however, the right kinds of expenses can be an investment in effective philanthropy. Properly leveraging charitable expenses can better align a sense of fulfillment for many philanthropists.
Today, we’re challenging you to start a discussion with other foundation members on how you can leverage expenses to maximize your philanthropic impact for next year. Here are some ways we’ve seen our clients use expenses to further their mission:
- Conducting research to better understand needs and opportunities to help.
- Funding the production of a documentary to build awareness around a topic.
- Retaining legal counsel to help with complicated, multi-year grants or structure naming opportunities.
Ready to Power Up Your Philanthropy?
With our technology platforms, you can track qualifying expenses against your MDR throughout the year, so you know exactly where you stand with the IRS requirements and compliance.
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