Finance

Private Foundation Minimum Distribution Calculator

Check whether a private foundation met its required 5% annual distribution.


Private Foundation Minimum Distribution Calculator

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A private foundation must distribute at least 5% of its net investment assets each year for charitable purposes — falling short triggers a real excise tax, not just a warning.

How it works

Multiplying average net investment assets by 5% gives the required distribution; comparing that against actual qualifying distributions shows any shortfall, and the shortfall multiplied by 30% gives the first-tier excise tax.

What this does not include

This does not include the “carryover” of excess distributions from prior years (which can offset a current-year shortfall), or the escalation to a 100% excise tax if a shortfall remains uncorrected by the IRS’s deadline.

How to use this calculator

  1. Enter average net investment assets and actual qualifying distributions.

Frequently asked questions

Why 5% specifically?

Congress set this floor in 1969 to prevent foundations from accumulating assets indefinitely without actually funding charitable work — 5% roughly approximates a sustainable long-run payout rate.

What counts as a “qualifying distribution”?

Grants to charities, reasonable administrative expenses for charitable activities, and certain program-related investments all generally count — but not, for example, investment management fees.

Does this apply to donor-advised funds too?

No — this specific 5% minimum distribution requirement applies to private foundations; donor-advised funds are governed by a different, separate set of payout rules.

Important: This is general information, not financial advice. Figures are estimates, and your lender or provider decides the real numbers. Check with a qualified adviser before acting on them.

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Written by

M. Whitfield

Personal finance writer

M. Whitfield writes the personal finance calculators, covering loans, mortgages, savings, tax and investment maths. The focus is on showing exactly which number goes into a formula and which assumptions a result depends on, so readers can tell when a figure applies to their situation and when it does not. Every finance page states what it does not account for as plainly as what it does.

Reviewed by

A. Whitfield-Reyes

Calculator reviewer — finance

A. Whitfield-Reyes reviews the finance calculators, checking compounding conventions, rate-period alignment, and whether each page is explicit about the costs and tax treatment it leaves out. Financial results are easy to state with false precision, so review focuses on whether the page makes its assumptions visible to a reader who is not looking for them.

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