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:
- Private operating foundations
- Exempt operating foundations
- Grant-making (private nonoperating) foundations
Determinations of private foundation status. Every organization that qualifies for exemption under Code section 501(c)(3) 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 applies for recognition of exemption by completing Part X of Form 1023. To claim exempt operating foundation status, a private operating foundation must request a private letter ruling, as discussed under Definition of Exempt Operating Foundation.