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Read this article if you are a manager, executive director, or CFO at a private foundation. 

Private foundations play an essential role in the philanthropic landscape, supporting charitable causes and driving social impact. However, their activities are subject to significant oversight by tax authorities and must adhere to strict standards regarding how funds are invested and distributed. Among the most important areas of compliance for private foundations to understand are the calculation of Minimum Investment Return (MIR), understanding qualifying distributions, and recognizing the significance of direct charitable expenditures. Over the next few months, we will take a deep dive into each of these three core concepts. For this first article in our three-part series, we’ll explore the MIR.  

As with all trilogies, the first chapter sets the stage for future installments. For illustrative purposes, we will be following the McQueen Family Foundation, a non-operating foundation, which must calculate its MIR as a first step in determining the number of distributions required for the year.  

MIR: The foundation of distribution obligations 

The MIR is a critical component for all private foundations—whether operating (i.e., conducting an exempt purpose function) or non-operating (i.e., an organization that primarily makes grants to other public charities in furtherance of their exempt purposes). MIR is used in part to determine how much the foundation must distribute annually to avoid penalties and maintain tax-exempt status. MIR is not a measure of profits or actual earnings, but rather is a standardized calculation based primarily on the value of the foundation’s investment (i.e., non-charitable use) assets. 

The primary purpose of the MIR is to ensure private foundations put their endowments to charitable use rather than accumulating excessive wealth with little to no public benefit. By imposing a minimum distribution requirement, Congress and the IRS seek to prevent foundations from serving as perpetual savings vehicles and help to encourage timely and impactful giving. 

Calculating the MIR 

The MIR is generally calculated as 5% of the average fair market value of the foundation’s non-charitable-use assets over the preceding year. Below is a general overview:  

• Identify non-charitable-use assets: These include investments such as stocks, bonds, real estate held for investment, and other assets not directly used in the foundation’s charitable programs. Assets used directly in conducting charitable activities (such as office space for grantmaking) are excluded from this calculation. 
• Calculate the average value of cash and securities: Typically, foundations determine the fair market value of these assets monthly (beginning of month value + end of month value)/2. These balances (there should be 12 of them) are then added together and divided by 12 to arrive at an average annual value. 
  • Note: While many would consider cash to be exclusively for charitable use (it is generally what is used by foundations for grant-making purposes after all), the IRS only deems 1.5% of average cash balances to be held for charitable use. All other cash is considered fair game for the MIR calculation. 
• Identify the fair market value of all other assets: In this step, the fair market value of any other assets not used for charitable purposes must be identified. This determination of value is done annually, and any date can be used as long as the same date is used every year. Special rules apply for real estate, which can be revalued every five years and must be appraised by a qualified appraiser. 
• Reductions claimed for blockage and acquisition indebtedness: Blockage refers to a reduction in the fair market value of certain assets—typically securities—and reflects the reality that selling a large block of securities may depress the market price, especially if the securities are not widely traded. There is also an allowable reduction in arriving at MIR for any amount of acquisition indebtedness (debts used to acquire or improve the property) related to assets includible in the calculation. 
• Apply the 5% rate: The IRS-mandated percentage (currently 5%) is applied to determine the minimum investment return.  

Example: 

The McQueen Family Foundation, working diligently with their CPA firm, has computed the value of all non-charitable-use assets for the year to be $10,700,000 based on the calculation in the chart below. After reducing this amount for cash deemed held for charitable use, the MIR for the year is calculated to be $526,975. This figure forms the basis for the McQueen Family Foundation’s distribution requirements for the year.  

Implications and compliance 

Accurate calculation of a foundation’s MIR is imperative. Failure to meet minimum distribution requirements can result in excise taxes and repeated/uncorrected distribution errors can potentially jeopardize the foundation’s tax-exempt status. Foundations often establish and document investment and grantmaking practices and policies to ensure distributions meet these required minimum thresholds.  

The MIR serves as a vital mechanism to ensure private foundations fulfill their philanthropic missions and remain accountable to the public. By adhering to IRS guidelines and maintaining diligent records, foundations not only avoid costly penalties but also contribute meaningfully to the communities and causes they support. Ultimately, the minimum investment return is more than a regulatory hurdle—it is a catalyst for purposeful giving and sustained charitable impact.  

Our nonprofit tax team has deep expertise in private foundation compliance and strategy and understands the unique challenges that come with tax planning, governance, and financial sustainability. We provide specialized guidance on IRS regulations, minimum distribution requirements, excise taxes, and complex accounting matters, ensuring foundations remain compliant while optimizing their financial strategies. Learn more about our team and services and stay tuned for the next installment in our series, where we will dive into the McQueen Family Foundation’s qualifying distributions. 

On March 25, 2025, President Trump issued an executive order regarding federal tax payments and refunds. Effective September 30, 2025, the US Secretary of Treasury will discontinue the issuance of paper checks for tax refunds. Additionally, “as soon as practicable,” all payments to the federal government must be made electronically. This change could have a significant impact on taxpayers, especially those who do not have a US bank account. 

The AICPA (American Institute of Certified Public Accountants) has proposed adjustments to this mandate, including a longer transition period and clearer guidance for taxpayers. We will continue to monitor any developments related to these suggestions. 

Our recommendation

We advise taxpayers to prepare to make their 2025 Q4 estimated payments and any balance due with their extended tax return electronically. There are several ways to pay your taxes electronically, as outlined below. 
 
Payment options: 

1. Your online IRS account: Access at https://www.irs.gov/account
2. IRS Direct Pay: Make payments directly from a bank account
3. Electronic Federal Tax Payment System (EFTPS): Enroll at https://www.eftps.gov 
4. Same-day wire: 
   • Offered by some financial institutions
   • Complete the same-day taxpayer worksheet and bring it to your financial institution
   • Contact your financial institution for availability, cost, and cut-off times 

BerryDunn will proactively monitor and communicate any updates related to this executive order to our clients. Please reach out to your BerryDunn team with questions or concerns. 

About BerryDunn 

Our seasoned tax professionals partner with you to offer practical, accessible guidance and to develop a detailed strategy that supports your unique needs. We excel at tax strategy and solutions, placing an emphasis on building long-term relationships. Our deep expertise spans a full range of tax concerns, tax services, and consulting to support individuals, businesses, and nonprofit organizations. Our tax consultants are specialists in their industry, working closely with their colleagues across the firm to deliver integrated, comprehensive solutions. Learn more about our services and team. 

In today’s digital age, residents expect the same level of service from their local government as they do from private companies—fast, transparent, and personalized. For municipalities striving to meet these expectations, a constituent relationship management (CRM) system can be a game-changer. 

Why constituent relationship management matters for local governments 

Unlike the private sector, local governments serve a diverse population with a wide range of needs—from pothole repairs and permit requests to public safety concerns and utility billing. A CRM system helps centralize and streamline these interactions, ensuring no request falls through the cracks. Additionally, a CRM system allows communities to identify specific neighborhoods with the greatest needs. Mapping capabilities, artificial intelligence, and additional channels for communication exist in today's modern CRM solutions for local government. 

Key benefits of CRM for municipal customer service 

A constituent relationship management platform empowers municipalities to deliver more responsive, transparent, and efficient service. Here’s how: 

1. Centralized communication 

A CRM consolidates all resident interactions—emails, calls, online forms, and in-person visits—into a single platform. This gives staff a complete view of each resident’s history, enabling faster and more informed responses. 

2. Efficient case management 

With automated ticketing and workflow tools, CRMs help route service requests to the right departments, track progress, and ensure timely resolution. This reduces duplication and improves accountability. 

3. Data-driven decision-making 

CRMs provide analytics on service trends, response times, and resident satisfaction. Leaders can use this data to identify bottlenecks, allocate resources more effectively, and improve service delivery. 

4. Improved transparency and trust 

Residents can receive real-time updates on their requests, access self-service portals, and provide feedback. This transparency builds trust and fosters a stronger relationship between the government and the community. 

Best practices for implementing a CRM in the public sector 

To maximize the impact of your constituent relationship management system, follow these best practices: 

Start with clear goals 

Define what you want to achieve—faster response times, better tracking, improved resident satisfaction—and align your CRM implementation with these objectives. 

Engage staff early 

Involve frontline employees in the selection and design of the CRM system. Their insights are invaluable, and early buy-in ensures smoother adoption. Subject matter expert (SME) employees will help guide decision-makers to the best technology and identify pain points that can be resolved early. 

Train and support 

Provide comprehensive training and ongoing support to ensure staff are confident using the system. Consider creating an organizational change management plan to assist the wide variety of departments that will be involved. Create change champions by functional area for increased employee adoption 

Integrate with existing systems 

Ensure your CRM can integrate with other municipal systems like GIS, permitting, and billing platforms to create a seamless experience for both staff and residents.  Integration will assist with work queues and customer communication without additional data entry. 

Communicate with the public 

Let residents know how the new system benefits them. Promote new features like online request tracking or mobile reporting tools. Conduct community engagement events prior to system selection and again prior to the new CRM go-live date. 

Constituent relationship management in action: A city transformed 

The City of Grand Rapids, Michigan, implemented a CRM system to manage 311 service requests. Within a year, they saw a 30% increase in issue resolution speed and a significant boost in resident satisfaction. Their success shows how technology, when paired with a commitment to service, can transform local government operations. 

A constituent relationship management system isn’t just a tech upgrade—it’s a strategic investment in better governance. By improving responsiveness, transparency, and efficiency, local governments can deliver the kind of customer service that earns trust and strengthens communities. 

How BerryDunn can help 

The human aspect of projects can often be forgotten in the maze of regulatory changes and legal requirements with which organizations and government entities must comply. Whether we work with you from project inception or come in to refocus an initiative already underway, our team has the background to understand your needs, and the depth of project experience and technical expertise necessary to provide the guidance and support you need. 
 
BerryDunn is not affiliated with any specific software vendor, allowing us to be truly objective. We stay abreast of the best solutions in the market, as well as industry best practices, emerging trends, and updates in the software vendor community. Our independence allows us to provide objective system consulting services and offer recommendations that serve your organization’s best interests. Learn more about our local government services and team.  
   

Organizations across industries are constantly seeking ways to enhance efficiency, streamline operations, and maximize value. However, outdated processes, unnecessary complexity, and organizational inertia can hinder progress, slowing innovation and impacting productivity. The good news? Businesses and institutions can adopt proven methods to become more agile, responsive, and effective—with the right mindset and leadership. 

Change can be daunting. Leaders may worry about disrupting established workflows, employees may fear efficiency initiatives could threaten job security, and stakeholders may hesitate to embrace new approaches. But the reality is this: Lean thinking isn't about cutting corners—it's about optimizing value. It's about refining processes so that employees can focus on what truly matters: delivering results. 

This approach reduces bottlenecks, eliminates redundant steps, and ensures that every action aligns with broader organizational goals. By adopting Lean methodologies, businesses can unlock new opportunities for innovation and productivity. 

The lean methodology 

Lean is all about working smarter, not harder. Originally developed from Toyota’s production system, Lean principles now extend beyond manufacturing into industries such as healthcare, technology, and finance. The core goal? Remove inefficiencies—whether excessive paperwork, outdated procedures, or unnecessary handoffs—so that teams can operate at peak performance. 

Rather than disruptive, large-scale changes, Lean focuses on continuous, incremental improvements that refine workflows over time. This approach enables organizations to optimize resources, simplify processes, and eliminate barriers to success. 

Identifying and reducing waste 

Lean methodology centers around eliminating waste in seven key areas: 

Transportation: Unnecessary movement of materials, information, or people slows down operations. Organizations should assess whether digital alternatives can replace physical movement, optimizing accessibility and minimizing disruptions. 

Inventory: Excess resources, whether unused equipment or redundant data, increase costs and complexity. Streamlining assets ensures that every resource serves a clear purpose. 

Motion: Inefficient physical movements or cumbersome digital workflows slow down productivity. Identifying friction points—whether unnecessary clicks or outdated storage practices—helps refine efficiency. 

Waiting: Bottlenecks occur when approvals, materials, or decisions are stalled in a queue. Empowering teams with clearer processes and real-time visibility reduces delays. 

Overprocessing: Adding unnecessary steps to a task makes it more time-consuming than necessary. Simplifying workflows ensures essential tasks remain streamlined without sacrificing quality. 

Overproduction: Producing more than needed creates inefficiencies. Whether it’s excessive documentation or redundant reporting, cutting down on excess work optimizes time and resources. 

Defects: Errors in processes lead to rework and wasted effort. Investing in clear instructions, automation, and proactive checks reduces mistakes and ensures smoother operations. 

Taking the next step toward operational excellence 

Lean methodology provides a powerful framework for enhancing efficiency, reducing waste, and driving meaningful improvements. By embracing continuous innovation, organizations can work smarter—not harder—delivering better results while optimizing resources. Whether streamlining workflows, eliminating unnecessary steps, or fostering a culture of improvement, Lean helps businesses operate at their best. 

Embracing smarter processes unlocks new potential for agility, productivity, and innovation. Organizations that invest in efficiency don’t just survive—they thrive. Ready to explore Lean principles further? Download our ebook to learn more details and explore common myths about Lean. 

On July 18, 2025, the United States took a historic step in digital finance when President Donald Trump signed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act into law. This legislation introduces the first comprehensive federal framework for payment stablecoins, aiming to balance innovation with consumer protection and financial stability while strengthening the US dollar’s global dominance. 

What are payment stablecoins? 

Payment stablecoins are digital assets pegged to a fixed monetary value (such as the US dollar) and designed for payments. Unlike volatile cryptocurrencies, they maintain price stability, making them attractive for everyday transactions and financial services. 

Key provisions of the GENIUS Act 

• Only permitted payment stablecoin issuers can issue stablecoins in the US, with the three main categories being: 

  1. A subsidiary of an insured depository institution 

  2. A federal qualified payment stablecoin issuer (can include nonbank entities but must be approved by the Office of the Comptroller of the Currency) 

  3. An entity established under state law and approved by a state payment stablecoin regulator 

• Stablecoins must be 100% backed with high-quality liquid assets (US dollars, short-term Treasuries). 

• Issuers must provide monthly disclosures of reserve composition. These disclosures must be reviewed by a Public Company Accounting Oversight Board (PCAOB)-registered accounting firm. 

• Issuers are prohibited from paying interest or yield to stablecoin holders. 

• Issuers are subject to the Bank Secrecy Act, requiring anti-money laundering and sanctions compliance programs. 

• In insolvency, stablecoin holders’ claims take priority over other creditors. 

• Issuers must have the technical ability to freeze or seize assets when legally required. 

• Stablecoins are not federally insured and may not be marketed as having such insurance. 

Why would companies issue stablecoins? 

Given that stablecoins must be backed 1:1 with highly liquid assets and they cannot pay interest, it begs the question of why a company would want to issue its own stablecoin, especially given the regulatory requirements. Furthermore, why would one want to invest in a stablecoin? 

Let’s use Starbucks as an example: 

Starbucks could issue its own stablecoin, let’s call it “Star Bucks” (pretty clever, right?) Starbucks customers could purchase Star Bucks and then use those Star Bucks when making purchases at Starbucks. To encourage the use of Star Bucks, Starbucks could offer incentives, such as lower prices and exclusive deals. But again, why would Starbucks want to encourage the use of Star Bucks? Think of it as free financing. Starbucks is taking customers’ money in exchange for Star Bucks. Sure, these Star Bucks must be backed 1:1 with highly liquid assets, but Starbucks will earn interest on these highly liquid assets. In a way, it’s like purchasing a gift card—the customer is giving a company money in exchange for a future product/service from that company. The company can then invest that cash. Starbucks could possibly even offer its employees Star Bucks in lieu of a paycheck, further increasing the amount of cash (or highly liquid assets) Starbucks has on hand. 

Impact on community banks 

One of the benefits of stablecoins is the ability to make real-time payments, thus increasing the chances of businesses and consumers circumventing the banking system. There are also concerns that if stablecoins become popular, it could cause a decrease in deposit balances held at financial institutions. Although stablecoins must be backed 1:1, the assets backing stablecoins don’t necessarily have to be in cash. Thus, it is not a guarantee that stablecoin issuers will back these assets with deposits at financial institutions. This isn’t entirely a new problem for financial institutions, as Starbucks reported stored card value at $1.78 billion at the end of 2024. This is cash that is sitting on gift cards instead of in a bank. Although some of this cash may still find its way into financial institutions, it’s likely not all of it will. 

There’s also concern that stablecoins may cause US Treasury market instability. US Treasuries are one of the permissible investments for backing stablecoins. Thus, there may be companies that have historically not been interested in US Treasuries that now will be. This increased demand could drive up US Treasury prices, which would lower their yields. Alternatively, there are also concerns as to what would happen if there were a “run” on the stablecoin market. For instance, stablecoins are built on blockchain technology and there are concerns that the safety of this technology could be compromised with advances in quantum computing. If stablecoin holders lose confidence in the system, it could cause them to dump their stablecoins rapidly, causing the stablecoin issuers to fulfill these redemptions, selling off large quantities of US Treasuries and possibly withdrawing large sums of cash from financial institutions.  

In a way, think of stablecoin issuers, especially those that are not financial institutions, as an added layer to the financial ecosystem. And, with each new layer, there is often an added level of market instability. However, community banks cannot ignore the GENIUS Act and the stablecoin market.  

Community banks will have a significant strategic decision to make:  

1. Issue its own stablecoin 

2. Partner with a fintech to issue a stablecoin 

3. Stay out of the stablecoin space 

Community banks will also need to decide if they’re willing to hold assets meant to back stablecoins for other stablecoin issuers. 

The stablecoin market will be an evolving landscape, and there is much to still be learned as to how the GENIUS Act will work in practice. The GENIUS Act becomes effective on the earlier of 18 months after enactment (so, January 18, 2027) or 120 days after federal agencies issue final regulations. Community banks should start discussing internally now how they plan to approach the GENIUS Act. If you plan to issue your own stablecoin, please reach out to the BerryDunn team. As a PCAOB-registered accounting firm, we are fully equipped to review your monthly reserve composition disclosures.