Nonprofit public charities are organizations that cater to the public needs rather than focusing on profits. They are considered to be a crucial part of the society, facilitating various causes such as education, healthcare, poverty alleviation, and environmental protection. The IRS defines a public charity as an organization that receives a substantial amount of its income from the public or government grants and funding.
In this article, we will discuss the definition of nonprofit public charities, the differences between public charities and private foundations, what happens when a public charity becomes a private foundation, examples of public charities, how to search for a nonprofit public charity, and what is the difference between a non-profit and a public charity.
Nonprofit Public Charity
Nonprofit public charities are organizations that operate to fulfill a public purpose, and they operate under section 501(c)(3) of the IRS tax code. They are organizations that use their income, donations, and grants to achieve their mission and purpose, not to earn profits for the organization’s members or investors.
Nonprofit public charities are typically tax-exempt, which means they don’t have to pay federal and state taxes. They are also eligible for tax-deductible donations from individuals and organizations. A 501(c)(3) public charity has to apply to the IRS and meet several requirements to obtain tax-exempt status.
Public Charity vs Private Foundation
The main difference between public charities and private foundations is the source of funding. Public charities receive the majority of their funding from the general public, government grants, and other sources. On the other hand, private foundations receive their funding from a single source, such as a family or corporation.
Another critical difference between the two organizations is how they distribute their assets. Private foundations are required to distribute only 5% of their assets each year, while public charities have to distribute more than 50% of their assets annually.
When A Public Charity Becomes A Private Foundation
A public charity can lose its status as a public charity and become a private foundation if it fails to meet the public support test. The public support test requires the organization to receive at least one-third of its income from public support, which includes individual donations, government grants, and contributions from other public charities.
If an organization fails the public support test for three consecutive years, it will lose its status as a public charity and become a private foundation. As a private foundation, the organization will be subjected to different tax laws and regulations.
Examples of Public Charities
There are many examples of nonprofit public charities, including:
- The American Red Cross – Provides relief to victims of disasters and emergencies.
- The Salvation Army – Provides social services, disaster relief, and rehabilitation services.
- Feeding America – Helps provide food assistance to people facing hunger in the United States.
- World Wildlife Fund – Works to conserve the environment and protect endangered species.
- Amnesty International – A human rights organization that advocates for the rights of people worldwide.
How to Search for a Nonprofit Public Charity
The IRS maintains a public charity search tool that allows you to search for a specific public charity by name or EIN number. You can also use GuideStar and Charity Navigator to find information about public charities, including their financials, programs, and impact.
What is the Difference between a Nonprofit and a Public Charity?
Both nonprofits and public charities are organizations that operate without the intention of making a profit. However, the main difference between the two is the nature of their activities. Nonprofits operate under a broad term that encompasses a wide range of organizations, while public charities have a narrower definition.
Public charities are a category of non-profit organizations that have a public purpose and rely heavily on public support. Nonprofits, on the other hand, can include organizations that operate for the benefit of their members, such as professional associations.
Nonprofit Public Charity Grants
Public charities receive grants from various sources, including government agencies, foundations, corporations, and individuals. Grants can be unrestricted or restricted, depending on the requirements set by the donor.
Grants for public charities can vary depending on the organization’s mission and purpose. Grants can support activities such as research, advocacy, capacity building, direct services, and more.
Public Charities List
There are several public charities lists available online that provide information about the top-performing public charities. Some of the most reputable lists include the Chronicle of Philanthropy’s Top 400 and Guidestar’s top-rated list.
Nonprofit Public Charity Examples
There are numerous examples of nonprofit public charities, many of which are household names. In addition to the organizations mentioned earlier, some other examples include:
- Habitat for Humanity – Helps build affordable housing for low-income families.
- The Nature Conservancy – Works to protect important land and water resources.
- Boys and Girls Clubs of America – Provides enrichment programs for young people.
- Doctors Without Borders – Provides medical assistance to people affected by conflict and disaster.
- Make-A-Wish Foundation – Helps grant the wishes of children with life-threatening medical conditions.
Nonprofit public charities play a vital role in society, working towards various causes such as education, healthcare, poverty alleviation, and environmental protection. Understanding the difference between public charities and private foundations, how a public charity can become a private foundation, and searching for a nonprofit public charity can help you make informed decisions when giving back to the community. By supporting public charities, you can help make a difference in the world and promote positive change.