A 501(c)(3) public charity is a nonprofit organization that is recognized by the Internal Revenue Service as tax-exempt and supported by the public. Most charitable nonprofits are structured as public charities rather than private foundations.
Public charities typically receive funding from a broad group of donors, government grants, or program-related activities. This distinguishes them from private foundations, which are usually funded by a single individual, family, or entity.
All organizations that qualify under Section 501(c)(3) fall into one of two categories:
Public charity status is generally more favorable because it involves fewer regulatory burdens and more flexible operations.
Organizations qualify as public charities in several ways, including:
Most newly formed nonprofits qualify by meeting one of the public support tests.
The public support tests measure whether an organization receives sufficient support from the public rather than relying on a small number of contributors.
These rules look at:
For a more detailed explanation, see Public Support Tests Explained.
Most organizations apply for recognition of tax exemption by filing IRS Form 1023 or Form 1023-EZ.
For a step-by-step overview, see Applying for 501(c)(3) Tax-Exempt Status.
If you are forming a nonprofit organization, see New York nonprofit formation.
Jonathan Lefkowitz is a New York attorney who advises nonprofit organizations on formation, federal tax exempt status under Section 501(c)(3), and regulatory compliance.
For additional information, see Lefkowitz Law Firm.
This page is provided for general educational purposes only and does not constitute legal advice.