A public charity is a type of nonprofit organization that actively engages in charitable activities and receives a significant portion of its support from the general public or government entities, rather than from a small number of individual donors or private sources. Typically, public charities are involved in programs that directly serve public interests, such as education, health, arts, or relief of poverty. They are recognized under Section 501(c)(3) of the Internal Revenue Code in the United States and must adhere to specific operational rules to maintain their tax-exempt status. Unlike private foundations that may primarily distribute grants, public charities often engage in charitable programming and fundraising activities to serve their mission. Their public support often comes from a diverse range of sources, including individual donors, government grants, and corporate contributions, which underscores their connection to the community.
In reality, public charities can vary significantly in size and structure. Some may operate on a small scale with limited staff and resources but still qualify as public charities due to diverse funding sources and active community engagement. There are many small public charities that make impactful changes in their communities regardless of their size.
Public charities actively engage in charitable programs and typically receive funding from a broad base of sources such as individual donations, government grants, and corporate sponsorships. In contrast, private foundations are generally established by a single source—such as an individual, family, or corporation—that provides the majority of the funding and primarily make grants to other charities rather than operating their own programs.
Public charities must operate primarily for charitable purposes and demonstrate that they receive a significant portion of their funding from public support (at least one-third of their total contributions must come from the general public or from government entities). They are also required to adhere to specific reporting and operational guidelines as set by the IRS and relevant regulatory bodies.
While public charities can certainly receive donations from individuals, corporations, or private foundations, they must ensure that at least one-third of their annual income comes from public support and diverse sources. If a public charity fails to meet this requirement over time, it may risk losing its tax-exempt status or be reclassified as a private foundation.