The are a few key differences between 501(c)(3) private foundation and 501(c)(3) public charities. Consult legal and tax professionals for information and guidance regarding your organizations requirements.
Operational and Funding Structure:
Private Foundation: A private foundation is typically funded by a single source, such as an individual, family, or corporation. It often operates with its own endowment or assets. Private foundations are governed by a board of directors or trustees, which may include family members or individuals associated with the founding entity.
Public Charity: A public charity, on the other hand, is usually funded by a diverse range of sources, including public donations, government grants, and program service revenues. It generally has a broader base of support and relies on public contributions to sustain its operations. Public charities may have a board of directors or trustees as well.
Activities:
Private Foundation: Private foundations are typically engaged in grantmaking activities, where they provide funds to support charitable causes and organizations. They often have specific areas of focus or grantmaking priorities, such as education, health, or the arts. Private foundations can also engage in their own direct charitable activities, such as operating programs or initiatives.
Public Charity: Public charities are more actively involved in direct charitable activities and may have their own programs and initiatives to advance their mission. They engage in a broader range of activities, such as providing services directly to individuals or communities, conducting research, advocating for specific causes, and raising public awareness.
Public Support:
Private Foundation: Private foundations typically receive support from a limited number of donors, often the original founder and their family or close associates. They may also receive contributions from corporations or other foundations. Public support for a private foundation is usually limited, and they might have stricter limitations on the amount of support they can receive from the general public.
Public Charity: Public charities rely heavily on public support, including donations from individuals, corporations, and government funding. They have a broader base of public donors and often engage in fundraising activities to sustain their operations. Public charities must meet specific public support tests to maintain their status, demonstrating that they receive a substantial amount of support from the general public.