Last updated on: June 5, 2025
Understanding the distinctions between a public charity and a private foundation is essential for nonprofit organizations—especially when it comes to navigating annual tax filing requirements. The IRS has clear rules for each designation, including specific forms and reporting obligations that help maintain tax-exempt status and ensure organizational transparency.
With more than 45,000 nonprofits supported over the past 20 years, BryteBridge remains committed to helping organizations stay compliant with both federal and state requirements. Below, we break down the current tax filing obligations for both public charities and private foundations, incorporating the most recent updates for 2025.
Public Charity
Public charities typically derive a significant portion of their revenue from the general public, government grants, or other public charities. To maintain tax-exempt status and meet compliance standards, public charities are required to complete several key filings each year:
IRS Form 990
All public charities must file an annual IRS information return. The appropriate version of Form 990 depends on the organization’s gross receipts and total assets:
- Form 990-N (e-Postcard): For organizations with gross receipts of $50,000 or less
- Form 990-EZ: For organizations with gross receipts between $50,001 and $200,000, and total assets below $500,000
- Form 990 (Full): For organizations with gross receipts over $200,000 or assets over $500,000
The IRS continues to require all 990-series forms be filed electronically. Paper filings are no longer accepted for most organizations.
Donor Acknowledgment Letters
Public charities must provide acknowledgment letters for any donation of $250 or more in cash or property. While not required for smaller donations, providing acknowledgment letters for all contributions is considered a best practice. These letters serve as documentation for the donor to claim a deduction and help build transparency and trust.
State-Specific Annual Filings
Beyond federal reporting, many states require annual charitable registration renewals, financial reports, and solicitation notices. These vary by jurisdiction, and organizations soliciting donations in multiple states may have to file in each one. Staying current with state charity offices is essential to remain in good standing.
Private Foundation
Private foundations are typically funded by a single source, such as an individual, family, or corporation, and generally make grants to other charitable entities rather than operating programs themselves. The IRS imposes a different set of filing and compliance requirements for these organizations:
IRS Form 990-PF
All private foundations, regardless of size, must file Form 990-PF annually. This form includes detailed reporting on:
- Grants and charitable distributions
- Investments and financial activity
- Compensation of directors and officers
- Net investment income
Excise Taxes
Private foundations are subject to excise taxes under IRS rules. These can include:
- 1.39% excise tax on net investment income
- Taxes on self-dealing (transactions between the foundation and disqualified persons)
- Penalties for failure to meet the minimum distribution requirement (generally 5% of assets annually)
Proper recordkeeping and adherence to the IRS’s strict regulations are crucial to avoid penalties.
Donor Acknowledgment Letters
Like public charities, private foundations must also provide written acknowledgment for donations of $250 or more. While private foundations are often donor-funded, proper documentation remains important for both legal and tax purposes.
Navigating these tax filing requirements can be complex, and it’s advisable for nonprofits—whether public charities or private foundations—to seek advice from nonprofit professionals before setting up the organization. BryteBridge Consulting is here to help your organization understand IRS guidelines and comply with federal and state regulations. These are crucial details for preserving tax-exempt status and fostering transparency.
While both public charities and private foundations serve charitable purposes, their tax filing obligations differ. By understanding the specific documentation required by the IRS for each designation, nonprofits can ensure compliance, maintain transparency, and continue their essential work of positively impacting their communities.
BryteBridge is here to help form your organization and file annual compliance documentation. Reach out to our team of nonprofit experts to answer your nonprofit questions today. We’re highly rated on Verified Reviews!
