In general, a private foundation is any section 501(c)(3) organization that does not fall into one of the categories specifically excluded from the definition of that term. Some tax law provisions apply to all private foundations. Others, however, are more narrowly focused on particular types of private foundations. Moreover, special rules apply to certain private foundations, and to organizations that are not private foundations and certain non-exempt entities.

For tax purposes, it may be necessary to distinguish between the following types of foundations:

  1. Private operating foundations
  2. Exempt operating foundations
  3. Grant-making (private nonoperating) foundations

Determinations of private foundation status. Every organization that qualifies for exemption under section 501(c)(3) of the Internal Revenue Code is a private foundation unless it falls into one of the categories specifically excluded from the definition of that term ("public charities"). A private operating foundation may claim that status when it initially applies for recognition of tax exempt status on Form 1023 and existing 501(c)(3) organizations must use Form 8940, Request for Miscellaneous Determination, to make such a request. To claim exempt operating foundation status, a private operating foundation must also use Form 8940, as discussed under Definition of Exempt Operating Foundation.

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