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Abstract: 

One of the legal requirements of a private grantmaking foundation (technically referred to as a private nonoperating foundation1) is that it must make “qualifying distributions” in an amount equal to about 5% of its investment assets each year. This rule is also referred to as the payout requirement. Precisely what counts as a qualified distribution will be explained further below, but generally it includes all grants and any administrative expenses that are reasonable and necessary to accomplish the foundation’s charitable purpose.

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Affiliations:  1: Rothstein Kass & Company.