Tool
Private Foundation 5% Distribution Calculator
Minimum investment return and distributable amount
Part IX — Noncharitable-use assets
Enter average monthly fair market values of assets not used directly for exempt purposes.
Part X — Distributable amount
Qualifying distributions (optional)
These amounts do not reduce the minimum investment return or the distributable amount. They are treated as qualifying distributions available to satisfy the distribution requirement.
Estimate assumes these expenses qualify as charitable-purpose disbursements. Investment expenses, §4940 tax, and other nonqualifying expenses generally do not count toward this amount. Because Part I, column (d), uses the cash receipts and disbursements method, enter amounts paid or expected to be paid rather than merely accrued.
Tax year
Result
Total noncharitable-use assets
$0.00
Net value of noncharitable-use assets
$0.00
Minimum Investment Return
Part IX, line 6
$0.00
Estimated Distributable Amount
Part X, line 7 — estimate only
$0.00
Qualifying distributions
Estimated distributable amount / current-year distribution target
$0.00
Less qualifying administrative expenses
− $0.00
Less other qualifying distributions entered
− $0.00
Estimated remaining qualifying distributions
Before any applicable prior-year undistributed income, excess-distribution carryovers, elections, set-asides, or other special §4942 adjustments not included above.
$0.00
View Calculation
Part IX
Part X
The distributable amount must generally be distributed as qualifying distributions by the end of the following tax year. Undistributed amounts may be subject to excise tax under IRC §4942.
This calculator does not compute qualifying distributions, carryovers, set-asides, or §4942 excise tax.
Methodology & Sources
- 2025 Instructions for Form 990-PF (Parts I, IX, X, XI, and XII)
- IRC §4942
- Deemed cash allowance of 1.5% of the line 3 subtotal
These tools provide estimates for educational and planning purposes only and are not legal, tax, or accounting advice. Actual IRS calculations, assessments, filing requirements, and organization status may differ based on specific facts and applicable law. Consult a qualified professional regarding specific circumstances.
How private foundation distribution requirements are calculated
Most private non-operating foundations must distribute a minimum amount each year under IRC §4942. The calculation starts with the foundation's noncharitable-use assets — investments and other property not used directly for charitable purposes — and applies a fixed percentage to determine the minimum investment return. That return is then adjusted to arrive at the distributable amount, which must be paid out as qualifying distributions within the required time frame.
- Part IX — Noncharitable-use assets: Average monthly fair market values of securities, cash, and other noncharitable-use assets, reduced by acquisition indebtedness.
- Deemed cash allowance: A standard 1.5% of the net asset subtotal is treated as cash held for charitable purposes and excluded from the minimum investment return base.
- 5% minimum investment return: The net value of noncharitable-use assets is multiplied by 5% to produce the minimum investment return under IRC §4942(e).
- Part X adjustments: The minimum investment return is reduced by the §4940 excise tax and certain other taxes, increased by recoveries of prior qualifying distributions, and reduced by any deduction allowed for the year.
- Timing and excise tax: The distributable amount generally must be distributed by the end of the following tax year. Undistributed income may be subject to excise tax under §4942.
Frequently asked questions
What is the private foundation 5% distribution requirement?
IRC §4942 requires most private non-operating foundations to distribute a minimum amount each year for charitable purposes. The starting point is generally 5% of the average fair market value of noncharitable-use assets, adjusted for taxes, recoveries, deductions, and certain other items.
How is minimum investment return calculated?
The minimum investment return is 5% of the net value of noncharitable-use assets. The net value starts with average monthly fair market values of securities, cash, and other noncharitable-use assets, reduced by acquisition indebtedness and a deemed cash allowance (ordinarily 1.5% of the net asset subtotal).
What counts as a qualifying distribution?
Qualifying distributions include grants to other charitable organizations, reasonable and necessary administrative expenses paid for charitable purposes, amounts paid to acquire assets used directly in charitable activities, and certain other permitted disbursements. Investment expenses, §4940 excise tax, and noncharitable payments generally do not count.
When must the distributable amount be paid?
The distributable amount for a tax year generally must be distributed as qualifying distributions by the end of the following tax year. Undistributed income may be subject to an initial excise tax under IRC §4942, with an additional tax if the shortfall is not corrected.
What happens if a foundation distributes less than the required amount?
An undistributed amount can trigger the §4942 excise tax on undistributed income. Foundations may also have options to correct a shortfall, apply excess-distribution carryovers, or make set-asides in limited circumstances, each with its own timing and documentation rules.
Does this calculator replace advice from a tax professional?
No. The calculator produces an estimate for planning and educational purposes. Consult a qualified tax professional for advice based on the specific facts of a foundation.