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Tax Considerations of Double Bottom Line Investing, Part II  

Author:  Jeffrey A. Zaluda.; Brian H. Axelrad.; Chelsey E. Ziegler.

Source: Volume 33, Number 01, Fall 2015 , pp.49-58(10)

Journal of Taxation of Investments

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Philanthropists and investors alike are increasingly placing a premium on the social impact of their investments in addition to a financial return, also known as “double bottom line investing.” As private foundations remain a favored vehicle for these philanthropists and investors to participate in the social impact sector, compliance with applicable Treasury regulations is an important consideration. For ease of reference, the authors divide impact investing into two categories: program-related investment and mission-related investment. Part I of this article discussed the tax considerations applicable to program-related investments. Part II outlines six tax regulations for foundations to consider with respect to mission-related investment and highlights critical issues to keep in mind in order to avoid penalties.

Keywords: mission-related investment, self-dealing, excess business holdings, UBTI, jeopardizing investments, private foundation rules

Affiliations:  1: Horwood Marcus & Berk Chartered; 2: Horwood Marcus & Berk Chartered; 3: John D. and Catherine T. MacArthur Foundation.

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