Benefits of Public Charity Status

Vernon: Wait just a minute…what’s the difference between a public charity and a private foundation?

Coach: 501(c)(3)s have either a public charity or a private foundation designation. The primary difference is the 501(c)(3)’s source of financial support. Generally, a public charity has a broad base of support while a private foundation has very limited sources of support. In addition, there are different tax rules that apply to each. For example, private foundations are subject to excise taxes that are not imposed on public charities. There’s more information on the differences between public charities and private foundations in the Life Cycle of a Public Charity/Private Foundation pages on the IRS website.