Is a private foundation permitted to make a grant to another private foundation?
Yes—but how you do it depends on what kind of private foundation is receiving the funds.
As a practical rule of thumb:
• Private operating foundations (they run their own charitable programs) can generally receive grants directly in a straightforward way.
• Non-operating private foundations (which primarily make grants rather than run their own programs) generally can’t be treated like an “easy” grantee. If you want to fund one, the grant usually needs to be structured with extra compliance safeguards—most commonly expenditure responsibility (ER)—so the money is restricted to a specific charitable purpose, documented in a written agreement, and followed up with reporting to show it was actually used the way intended.
Operating vs non-operating private foundations
A private operating foundation primarily runs its own charitable activities (it “does the work”). A non-operating private foundation primarily functions as a grantmaking vehicle (it “funds the work”). From a compliance standpoint, a grant to a private operating foundation often looks more like funding a public charity, because the recipient is actively running its own charitable programs. By contrast, a non-operating private foundation is typically a grantmaker itself, so the IRS expects more structure and oversight when one grantmaking foundation is routing funds to another grantmaking foundation.
The “safe path” for grants to non-operating private foundations: Expenditure Responsibility (ER)
If you want to make a grant to a non-operating private foundation, the cleanest and most defensible approach is usually to treat it as an ER grant. ER is a defined set of procedures designed to document due diligence and ensure the funds are used only for charitable purposes, with follow-up tracking.
Quick ER checklist
• Pre-grant inquiry: basic due diligence on the recipient and the project
• Written grant agreement: charitable purpose, restrictions on use, and repayment if funds are misused
• Required reporting from the grantee: reports showing how the funds were used
• Foundation reporting: disclose ER grants and compliance on Form 990-PF
Common ER pitfalls to avoid
• “We already know them” so no ER is done
• Missing written terms (handshake grants create avoidable risk)
• No follow-up reports (ER requires tracking, not just intent)
Alternatives to ER (when simplicity is the main goal)
If your goal is to support charitable work with fewer compliance steps, it may be simpler to make the grant to a public charity or to a private operating foundation. But when the recipient must be another private foundation, ER is often the structure that makes the grant workable and defensible.
Bottom line
A grant to a private operating foundation is typically straightforward. A grant to a non-operating private foundation is usually only advisable if you follow specific compliance procedures—most commonly expenditure responsibility—so the grant is properly restricted, monitored, and reported.
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