Public charities are generally organizations that are classified as: (1) community service organizations, churches, hospitals, qualified medical research organizations that are affiliated with hospitals, schools, and universities; (2) that have an active fund raising program, and receive contributions from many sources, the general public, government agencies, corporations, private foundations, or other public charities; and (3) that receives income from the conduct of activities that further the organization’s tax-exempt purposes, or (4) actively functions in a supporting relationship to one or more existing public charity.
Generally, a private foundation is any 501(c)(3) organization that does not fit the definition of a public charity. Under tax law, a 501(c)(3) organization is presumed to be a private foundation unless it requests, and qualifies for, a ruling or determination as a public charity.
A public charity usually receives a great portion of its financial support from the general public or government agencies, and has greater overall interaction with the public. A private foundation is usually controlled by a small group of individuals, and generally receives most of its financial support from a small amount of sources and investment income.
Although both classifications may be recognized as 501(c)(3) tax-exempt, IRS treatment and reporting is very different for a public charity versus a private foundation. For instance, you must declare whether your organization is a public charity or a private foundation on your 501(c)(3) application, and offer support of the same. Public charities must annually file IRS Form 990, 990-EZ or 990N; private foundations must annually file IRS Form 990-PF.
-by Gloria Mason, Legal Assistant
We can prepare and file your 501(c)(3) tax exemption application. Should you want to learn more about this post or our services, please visit www.DandridgeLaw.com or email ContactUs@DandridgeLaw.com for a FREE Initial Consultation.
Join our Facebook page at The Dandridge Law Firm
Follow us on Twitter at http://twitter.com/DandridgeLaw
Labels: nonprofit, Nonprofit Annual Return, nonprofit compliance, nonprofit private foundation, nonprofit public charity
