What is a Private Charitable Foundation?

A private charitable foundation is defined under Section 501(c)(3) of the Internal Revenue Code (“IRC”) as an entity that is organized and operated exclusively for charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term “charitable” includes relief of the poor, the distressed or the underprivileged, advancement of religion, advancement of education or science, erecting or maintain public buildings, monuments or works, lessening the burdens of government, lessening neighborhood tensions, eliminating prejudice and discrimination, defending human and civil rights secured by law, and combating community deterioration and juvenile delinquency.

After creation, the board or trustees must apply for Section 501(c)(3) tax exempt recognition with the IRS. The board or trustees are required to provide detailed information regarding the structure of the foundation, including disclosing compensation to board members and trustees, projected expenses and planned giving. The foundation will be required to file annual returns to ensure that the foundation is meeting its minimum obligations (discussed below).