Can you donate to a newly formed private foundation when its application for tax-exempt status is still pending?

Yes, you generally can donate to a newly formed private foundation while its IRS application for tax-exempt status is still pending. However, there is an important catch: until the IRS approves the foundation’s exemption application, the donor does not have final assurance that the contribution will be tax-deductible.

In many cases, this works out fine. If the foundation timely files its exemption application and the IRS approves it, the foundation’s tax-exempt status is generally recognized retroactively back to the date it was legally formed. In that case, contributions made during the pending should also be treated as tax-deductible.

But if the IRS does not approve the application, or if the application is filed too late and retroactive recognition is not granted, the donor’s deduction may be lost.

So the practical answer is:

You can donate while the application is pending, but both the donor and the foundation should understand the timing risk, document everything carefully, and avoid promising more certainty than actually exists.

The basic rule

A newly formed private foundation is usually created under state law first. It may have articles of incorporation or a trust document, an EIN, a board or trustees, a bank account, and a charitable purpose before it receives its IRS determination letter.

The IRS determination letter is the formal confirmation that the organization qualifies as tax-exempt under Section 501(c)(3) and is classified as a private foundation.

For most newly formed charitable organizations, the key timing rule is the 27-month rule. If the organization files Form 1023 (the IRS application for tax-exemption), within 27 months after the end of the month in which it was legally formed, and the IRS approves the application, its exemption is generally effective back to the date of formation.

That retroactive recognition is what makes donations during the pending period deductible in general.

For example, assume a private foundation is legally formed on March 15, 2026. The foundation files Form 1023 later in 2026, and the IRS approves the application in 2027 with an effective date of March 15, 2026. In that case, a contribution made to the foundation in December 2026 would generally be treated as a contribution to a tax-exempt private foundation.

However, during the period before approval, the donor does not yet have final assurance that the deduction will be allowed.

So should you wait for the determination letter?

Sometimes the best answer is yes.

It may be wise to wait before making a major contribution if:

• the donor needs certainty before filing a tax return;

• the gift is very large;

• the foundation has not yet filed Form 1023;

• the foundation’s charitable activities are unusual;

• the donor is not comfortable with the risk of delayed or denied approval.

On the other hand, waiting is not always necessary. If the foundation is properly formed, the Form 1023 is timely filed, the charitable purpose is straightforward, and the donor understands the pending-status risk, a contribution during the pending period may be reasonable.

Bottom line

Yes, you can generally donate to a newly formed private foundation while its application for tax-exempt status is still pending.

If the foundation timely files its exemption application and the IRS approves it retroactively to the date of formation, contributions made during the pending period are generally tax-deductible, subject to the normal rules and limits for gifts to private foundations.

However, donors do not have final assurance of deductibility while the application is pending. If the IRS denies the application, or if exemption is recognized only from a later date (which is very rare), the donor’s deduction may be limited or lost.

For small and straightforward gifts, donating during the pending period may be perfectly reasonable. For large, year-end, or noncash gifts, donors and foundations should slow down and coordinate with their advisors before the transfer is made.

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