Section 501(c)(3) organizations may be classified into two classes, private foundations, and public charities.
Generally, organizations that are classified as public charities are those that:
Are churches, hospitals, qualified medical research organizations affiliated with hospitals, schools, colleges and universities,
Have an active fundraising program and receive contributions from many sources, including the general public, governmental agencies, corporations, private foundations or other public charities,
Receive income from the conduct of activities in furtherance of the organization’s exempt purposes; or
Actively function in a supporting relationship to one or more existing public charities.
Private foundations, in contrast, typically have a single major source of funding (usually gifts from one family or corporation rather than funding from many sources) and most have as their primary activity the making of grants to other charitable organizations and to individuals, rather than the direct operation of charitable programs.
The Internal Revenue Code subjects non-exempt charitable trusts to some of the same requirements and restrictions that apply to private foundations if the trusts have any unexpired interests devoted to charitable purposes for which a charitable deduction was allowed. The aim is to prevent a trust of this nature from being used to avoid the requirements and restrictions that apply to private foundations.