Private Foundations are subject to many restrictions in order to preserve the organization’s tax exempt status.  In addition to excise taxes on the organization, the regulations impose specific penalties on the Foundation’s leadership if there is a determination of any violations.  The most common regulations concern the compensation arrangements, and impact the Board and the Private Foundation’s managers; these are the Intermediate Sanctions Regulation (IRC 4958) and the Private Inurement Regulation (IRC Section 4941).  There are two additional regulations that must be considered.  The first of these is Investments Which Jeopardize Charitable Purpose (IRC Section 4944), which imposes an excise tax on Private Foundations if the organization makes investments that could “jeopardize the carrying out of its exempt purpose”.  The second regulation is Expenditure Responsibility (IRC Section 4945(h)) which imposes a penalty on the Foundation if due diligence is not followed relative to the issuance of grants.