Part IV. Foundation Classification

Every organization described in section 501(c)(3) has a foundation classification. The two main classifications are public charity and private foundation. A public charity generally has a broad base of support, while a private foundation generally receives its support from a small number of donors. Your foundation classification is important because it determines which tax rules govern your operations and which limitations apply to your donors’ contributions. For example, deductibility of contributions to a private foundation is more limited than

8 Form 1023-EZ Instructions

contributions to a public charity. In addition, private foundations are subject to excise taxes that are not imposed on public charities, discussed later.

Section 509(a) provides that every section 501(c)(3) organization is a private foundation unless it qualifies for one of the public charity exceptions under section 509(a)(1), 509(a)(2), 509(a)(3), or 509(a)(4). Section 509(a)(1) public charities have nine sub-classifications; however, only three of those subclasses (described in the first three bullets below) can apply for exemption on Form 1023-EZ. Private foundations have two main sub-classifications.

Note. Private operating foundations can’t apply for exemption on Form 1023-EZ (see question 28 on the Form 1023-EZ Eligibility Worksheet).

You are solely responsible to check the line on Part IV of