Should I start a private foundation or a public charity?

To qualify for tax-exempt status, organizations must serve purposes recognized by the IRS—such as charitable, religious, educational, scientific, or humanitarian causes.

Private foundations are typically funded by a single source (individual or business) and distribute grants to other charities or individuals.

Public charities rely on ongoing public donations and directly carry out charitable activities.

Key differences:

• Funding: Foundations have one main donor; charities raise funds from the public.
• Use of funds: Foundations make grants; charities operate programs.
• Tax benefits: Public charities offer higher donor deduction limits, while private foundations can provide significant estate tax savings.