W-8BEN-E: A Guide for Private Foundations

On Form W-8BEN-E's list of statuses, 'Private foundation' is located next to 'Tax-exempt organization,' but it signifies a more specific type of nonprofit. Correctly identifying your foundation is key to properly completing the form and successfully interacting with American donors or partners.

This article will help you understand what a private foundation is in the context of Form W-8BEN-E and guide you through the correct completion process.

What is a Private Foundation?

While a private foundation is a type of nonprofit organization, its key difference lies in its source of funding. A private foundation is typically a charitable organization that receives the majority of its funds from a single source: an individual, a family, or a corporation. It does not engage in active public fundraising.

In contrast, a public charity (which would select the more general 'Tax-exempt organization' status) receives support from the general public, the government, or other public sources. If your foundation was established and is primarily funded by a single family or company to achieve charitable goals, the 'Private foundation' status is the most accurate choice for you.

The Path for a Private Foundation on Form W-8BEN-E

The process of identifying your foundation on the form consists of two consecutive steps that determine which specific section you will need to complete.

Step 1: Choose Chapter 3 Status

In Part I, Line 4, you check the box for 'Private foundation.' This provides the primary, most accurate classification of your organization.

Step 2: Specify FATCA Status in Chapter 4

After making your selection in Line 4, you must specify your status for FATCA purposes in Part I, Line 5. For a private foundation, there are two likely paths, which we discuss in detail below.

Key Difference from 'Tax-Exempt Organization'

Although any private foundation is a nonprofit organization, the 'Private foundation' status in Line 4 is more specific. If your organization fits the definition of a private foundation, choosing this status provides the U.S. withholding agent with more precise information about your structure. The general 'Tax-exempt organization' status is better suited for public charities, professional associations, and other NPOs.

Key Questions and Answers

• If your foundation is recognized by the IRS: If your private foundation has received an official determination letter from the U.S. Internal Revenue Service confirming that it meets the requirements of section 501(c)(3) of the U.S. Tax Code, you should select the '501(c) organization' status. This choice requires you to complete Part XXI of the form.
• If your foundation is not recognized by the IRS: If your foundation does not have official status from the IRS but is a recognized nonprofit/charitable organization in its country of establishment, you should select the more general 'Nonprofit organization' status. This choice requires you to complete Part XXII of the form.

The path for a private foundation on Form W-8BEN-E is clear: selecting the specific status in Chapter 3 leads to choosing the appropriate FATCA status, which in turn determines whether you need to fill out Part XXI or Part XXII. This allows for accurate identification of your organization and ensures the correct application of tax rules to grants or other income from U.S. sources.