A nonprofit organization that is organized and operated exclusively for charitable purposes may be deemed a public charity (and not a private foundation) under section 501(c)(3) of the Internal Revenue Code (IRC) in one of three principal ways.
As mentioned in our prior post, a nonprofit organization that is organized and operated for charitable purposes may be deemed a public charity (and not a private foundation) if it falls into one of three primary categories.
All nonprofit organizations recognized by the IRS as exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code (known as 501(c)(3) organizations) are charitable. However, not all 501(c)(3) organizations are subject to the same rules.
What's in a Name? Nonprofit vs. Charity
A common source of confusion in both the United States and other countries is the difference between a nonprofit organization and a charitable organization. While these terms are sometimes used interchangeably, they have different meanings under U.S. tax law. Generally, nonprofit status is a concept of state corporate law, and charity status — or what is charitable — is a concept of federal tax law.