Public Charities vs Private Foundations: This Is The Difference

Stephanie Glanville | May 9, 2018 | Read time: 4 minute(s) | Deadline, Form 990 Series, Nonprofits, Tax Exempt, Tax Tips | No Comments

What is the difference between a public charity and a private foundation?

At TaxBandits we get this question a lot, so today we will break it down.

Public Charities

These are hospitals, churches, or qualified medical research organizations affiliated with colleges, schools, hospitals, and universities. They have an active fundraising program and receive contributions from the general public, governmental agencies, corporations, private foundations or other public charities. The organization receives financial support by offering activities furthering their organization’s mission, or actively function in a supporting relationship to one or more existing public charities.

Private Foundations

Private Foundations typically receive the majority of their funding from a single source. These usually consist of gifts from one family or corporation sponsor rather than funding from many sources. Most private foundations make grants to other charitable organizations and individuals as their primary activity, rather than the direct operation of charitable programs.

What Is Schedule A?

Schedule A is used by tax-exempt organizations filing Form 990/990-EZ to provide information about its public charity status and public support. This Schedule allows organizations to explain their programs/services and its mission or other charitable goals.

Any non-profit that is supported by the public must file this Schedule along with their Form 990.

What is Public Support?

If an organization receives more than 10% but less than 33 and ⅓% of its support from the general public or a governmental unit, it can qualify as a public charity. It is up to the charity to establish that it normally receives a substantial part of its support from governmental units or the general public.

And that, in a nutshell, is the difference between public charities and private foundations.

Hope this clears things up!

When is Form 990-PF Due?

Your nonprofit tax return is due on the 15th day of the 5th month following the end of your organization’s taxable year. If your organization fiscal year follows the calendar year your Form 990 will be due May 15, 2018.

Form 990 Deadline Countdown

Where To File Form 990?

TaxBandits software is entirely cloud-based giving you access to your account from anywhere. The filing process consists of a simplified, step-by-step interview-style process without the complicated IRS terminology. At TaxBandits we take pride in providing tax-exempt organizations a safe, secure, and efficient e-filing process that will save you time and money.

If you have questions or concerns, please contact our experienced team of experts located in historic Rock Hill, SC, we are available by phone, live chat, and email in both English and Spanish for your convenience.