Part XIII. Private Operating Foundations

All organizations that claim status as private operating foundations under section 4942(j)(3) or (5) for 2025 must complete Part XIII.

Certain elderly care facilities (section 4942(j)(5)). For purposes of section 4942 only, certain elderly care facilities that, on May 26, 1969, and at all times thereafter before the close of the tax year, operated and maintained as their principal functional purpose facilities for the long-term care, comfort, maintenance, or education of permanently and totally disabled persons, elderly persons, needy widows, or children may be classified as private operating foundations. To be so classified, they must also meet the endowment test described below.

If the foundation is a section 4942(j)(5) organization, complete only lines 1a, 1b, 2c, 2d, 2e, and 3b. Enter “N/A” on all other lines in the Total column for Part XIII.

Private operating foundation (section 4942(j)(3)). The term “private operating foundation” means any private foundation that spends at least 85% of the smaller of its adjusted net income or its minimum investment return directly for the active conduct of the exempt purpose or functions for which the foundation is organized and operated (the income test) and that also meets one of the three tests below.

1. Assets test. 65% or more of the foundation's assets are devoted directly to those activities or functionally related businesses, or both; or 65% or more of the foundation's assets are stock of a corporation that is controlled by the foundation, and substantially all of the assets of the corporation are devoted to those activities or functionally related businesses.

2. Endowment test. The foundation normally makes qualifying distributions directly for the active conduct of the exempt purpose or functions for which it is organized and operated in an amount that is two-thirds or more of its minimum investment return.

3. Support test. The foundation normally receives 85% or more of its support (other than gross investment income as defined in section 509(e)) from the public and from five or more exempt organizations that aren't described in section 4946(a)(1) (H) with respect to each other or the recipient foundation. Not more than 25% of the support (other than gross investment income) normally may be received from any one of the exempt organizations and not more than one-half of the support normally may be received from gross investment income.

See the regulations under section 4942 for the meaning of “directly for the active conduct” of exempt activities for purposes of these tests.

Complying with these tests. A foundation may meet the income test and either the assets, endowment, or support test by satisfying the tests for any 3 years during a 4-year period consisting of the tax year in question and the 3 immediately preceding tax years. It may also meet the tests based on the total of all related amounts of income or assets held, received, or distributed during that 4-year period. A foundation may not use one method for satisfying the income test and another for satisfying one of the three alternative tests. Thus, if a foundation meets the income test on the 3-out-of-4-year basis for a particular tax year, it may not use the 4-year aggregation method for meeting one of the three alternative tests for that same year.

In completing line 3c(3) of Part XIII under the aggregation method, the largest amount of support from an exempt organization will be based on the total amount received for the 4-year period from any one exempt organization. A new private foundation must use the aggregation method to satisfy the tests for its first tax year in order to be treated as a private operating foundation from the beginning of that year. It must continue to use the aggregation method for its second and third tax years to maintain its status for those years.

34 Instructions for Form 990-PF (2025)