Organizations that are classified as 501(c)(3) tax-exempt status are further classified by the government as one of five types under section 509(a) of the Internal Revenue Code. These categories include private foundations and four different types of public charities. According to the IRC, any organization that does not classify as a public charity is designated as a private operating foundation or private non-operating foundation.
While private foundations typically receive money from a small number of donors, public charities are organizations that receive a significant amount of their revenue from the public or government. To remain a public charity, at least one-third of revenue must be from a broad base of public support. When you complete Form 1023 to file as for 501(c)(3) status, you’ll be asked questions in Part X that the IRS will use to classify your organization.
- 509(a)(1) – public-supported charities including churches, schools and hospitals
- 509(a)(2) – organizations that receive support from a combination of gifts and fees for their exempt services
- 509(a)(3) – “supporting organizations” that receive income from a wider range of sources
- 509(a)(4) – organizations that operate for testing for public safety
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