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Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Can a private foundation change their status from a non-operating

Customer Question

Can a private foundation change their status from a non-operating to an operating foundation and if so, how often?

What does it take to change your status
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

Hi and welcome to Just Answer!
Please find here a chart showing the life cycle of a private foundation -,,id=127912,00.html .

This chart contains links to helpful information about points of intersection between your organization and the IRS, including access to explanatory information and forms that your organization may need to file with the IRS.


There is no such thing as "non-operating."
A private foundation may simply stop their operations - but is required to continue reporting to the IRS.if you want to keep its tax except status.

Beginning in 2008, small tax-exempt organizations that normally have annual gross receipts less than $25,000 ($50,000 for tax years ending on or after December 31, 2010) and elect not to file Form 990 or Form 990-EZ may be required to file an annual electronic notice (e-Postcard). See Annual Electronic Filing Requirement for Small Tax-Exempt Organizations for more information -,,id=169250,00.html

Let me know if you need any help or clarification.

Customer: replied 5 years ago.
Hmm, ok, "non-operating" as used in my original question does not refer to an organization that has "stopped their operations". It is referred to as a grant making foundation or as illustrated below (in bold):

<table border="0" cellspacing="0" cellpadding="0">

Grant-Making Foundations

A private foundation that is neither a private operating foundation nor an exempt operating foundation is sometimes referred to as a grant-making foundation or a private nonoperating foundation.

Could you please answer my question though as to
- if a private foundation that previously qualifed as an operating foundation no longer qualifies as a operating foundation, can it change it's designation and how often
- what is the process/ is their a process for doing so?
Expert:  Lev replied 5 years ago.

A grant-making foundation is not a status of the private foundation - it is a type of the private foundation selecting at the beginning.


If a private foundation that previously was qualified as a grant-making foundation - and it doesn't qualify anymore - it may change the type or the private foundation and start a new cycle - thus has to amend ByLaws and other organizing documents and apply for recognition of exemption from federal income taxation under IRC.


The private foundation may not change its type and continue to use previously granted exemption.

Application process is described here -,,id=96210,00.html

Specifically - to claim exempt operating foundation status, a private operating foundation must request a private letter ruling - here is Revenue Procedure that describes the procedure -

In additional - you may find the link helpful
Sorry for confusion.