7 Foundations, Trusts, and Grant-Making Organizations
This chapter explains NCCS’s taxonomy for foundations, trusts, and grant-making organizations:
[INSERT TABLE]
Each type of organization is described in detail below.
7.1 Not a foundation
Description. Organizations in this category are not foundations, trusts, or grant-making organizations.
Foundation/trust/grant-making organization status. Organizations in this category are not foundations, trusts, or grant-making organizations.
Subsector. These organizations can be 501(c)(3) or 501not3 organizations. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Public or private foundation status. These organizations are neither public nor private foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. Some organizations in this category (501(c)(3) organizations) are eligible to receive tax-deductible charitable contributions, and others (501not3 organizations) are not. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Identification. We can identify organizations that are not foundations, trusts, or grant-making organizations using SUBSECCD (subsection code), LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of not 90, 91, or 92 for SUBSECCD indicate that an organization is not a 4947(a)(1) charitable trust or a 4947(a)(2) split-interest charitable trust; values of not PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a not private foundation; and values of not T20, T21, T22, T23, T30, T31, T40, T50, T70, T90, T99, A11, B11, C11, D11, E11, F11, G11, H11, I11, J11, K11, L11, M11, N11, O11, P11, Q11, R11, S11, T11, U11, V11, W11, X11, Y11, A12, B12, C12, D12, E12, F12, G12, H12, I12, J12, K12, L12, M12, N12, O12, P12, Q12, R12, S12, T12, U12, V12, W12, X12, or Y12 for NTEECC indicate that an organization is not a general private foundation, private corporate foundation, private grantmaking foundation, private operating foundation, public foundation, community foundation, mobilizing social sector resources and support foundation, federated giving program, unclassified foundation, subsector-specific foundation, public single organization support organization, or public multi organization support organization.
7.3 Private corporate foundation
Description. Organizations in this category have 501(c)(3) private foundation status (from the IRS) and “corporate foundation” NTEE codes. Corporate foundations are “private foundations whose grant funds are derived primarily from the contributions of a profit-making business organization.”2
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations are 501(c)(3) private foundations.
Public or private foundation status. These organizations are private foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. These organizations are eligible to receive tax-deductible charitable contributions.
Identification. We can identify private corporate foundations using SUBSECCD (subsection code), LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of 3 for SUBSECCD indicate that an organization is a 501(c)(3) organization; values of PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a private foundation; and values of T21 for NTEECC indicate that an organization is a corporate foundation.
7.4 Private grantmaking foundation
Description. Organizations in this category have 501(c)(3) private foundation status (from the IRS) and “private independent foundation” NTEE codes. Private independent foundations are “private foundations that make grants based on charitable endowments. Because of their endowments, they are focused primarily on grantmaking and generally do not actively raise funds or seek public financial support. These are the most common type of private foundation They are generally endowed, usually from a single individual or family. Private foundations are considered family foundations if relatives or the original donor are still active on the board of trustees or in the operation of the foundation.”3
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations are 501(c)(3) private foundations.
Public or private foundation status. These organizations are private foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. These organizations are eligible to receive tax-deductible charitable contributions.
Identification. We can identify private grantmaking foundations using SUBSECCD (subsection code), LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of 3 for SUBSECCD indicate that an organization is a 501(c)(3) organization; values of PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a private foundation; and values of T22 for NTEECC indicate that an organization is a private independent foundation.
7.5 Private operating foundation
Description. Organizations in this category have 501(c)(3) private foundation status (from the IRS) and “private operating foundation” NTEE codes. Private operating foundations are “private foundations that use a bulk of their resources to provide charitable services or run charitable programs of their own. They make few, if any, grants to outside organizations and, like private independent foundations, they generally do not raise funds from the public.”4
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations are 501(c)(3) private foundations.
Public or private foundation status. These organizations are private foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. These organizations are eligible to receive tax-deductible charitable contributions.
Identification. We can identify private operating foundations using SUBSECCD (subsection code), LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of 3 for SUBSECCD indicate that an organization is a 501(c)(3) organization; values of PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a private foundation; and values of T23 for NTEECC indicate that an organization is a private operating foundation.
7.6 General private foundation
Description. Organizations in this category have 501(c)(3) private foundation status (from the IRS) and “private grantmaking foundation” NTEE codes. Private grantmaking foundations are “nongovernmental, nonprofit organizations with funds (usually from a single source, such as an individual, family, or corporation) and programs managed by its own trustees or directors, established to maintain or aid social, educational, religious or other charitable activities serving the common welfare, primarily through grantmaking.”5 This NTEE code is only used “if one of the more specific does in the T20 series [i.e., corporate foundations, private independent foundations, or private operating foundations] cannot be determined.”6
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations are 501(c)(3) private foundations.
Public or private foundation status. These organizations are private foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. These organizations are eligible to receive tax-deductible charitable contributions.
Identification. We can identify general private foundations using SUBSECCD (subsection code), LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of 3 for SUBSECCD indicate that an organization is a 501(c)(3) organization; values of PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a private foundation; and values of T20 for NTEECC indicate that an organization is a private grantmaking foundation.
7.7 Mobilizing sector resources and support foundation
Description. Organizations in this category have 501(c)(3) private foundation status (from the IRS) and mobilize social sector resources and support (according to their NTEE codes). They “encourage people to volunteer” or are “concerned with civil society, philanthropy, and the nonprofit sector” and “seek to promote the practice of charitable giving and voluntarism through a variety of strategies including, advocacy, disclosure, information exchange, and research.”7
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations are 501(c)(3) private foundations.
Public or private foundation status. These organizations are private foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. These organizations are eligible to receive tax-deductible charitable contributions.
Identification. We can identify mobilizing social sector resources and support foundations using SUBSECCD (subsection code), LEVEL 1 (public charity or private foundation?), and NTEECC (NTEECC primary purpose). Values of 3 for SUBSECCD indicate that an organization is a 501(c)(3) organization; values of PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a private foundation; and values of T40 or T50 for NTEECC indicate that an organization promotes voluntarism, philanthropy, or charity.
7.8 Federated campaign
Description. Organizations in this category have”federated giving program” NTEE codes. Federated giving programs are “organizations that administer centralized fundraising efforts and then in turn distribute the contributed funds to several nonprofit agencies. United Way and community chests or funds, the United Jewish Appeal and other religious appeals are examples of federated giving programs.”8
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations can be 501(c)(3) or 501not3 organizations. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Public or private foundation status. These organizations can be public or private foundations. (See Appendix B for more details about 501(c)(3) public charities vs. private foundations).
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. Some organizations in this category (501(c)(3) organizations) are eligible to receive tax-deductible charitable contributions, and others (501not3 organizations) are not. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Identification. We can identify federated campaigns using LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of not U (unknown) for LEVEL1 indicate that an organization is not unknown, and values of T70 for NTEECC indicate that an organization is a federated giving program.
7.9 Unclassified foundation
Description. Organizations in this category have “named trusts not elsewhere classified” or “philanthropy, voluntarism & grantmaking foundations not elsewhere classified” NTEE codes. These NTEE codes are for “named trusts not classified elsewhere” and “organizations that clearly provide philanthropy, voluntarism and grantmaking services where the major purpose is unclear enough that a more specific code cannot be accurately assigned.”9
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations can be 501(c)(3) or 501not3 organizations. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Public or private foundation status. These organizations can be public or private foundations. (See Appendix B for more details about 501(c)(3) public charities vs. private foundations).
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. Some organizations in this category (501(c)(3) organizations) are eligible to receive tax-deductible charitable contributions, and others (501not3 organizations) are not. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Identification. We can identify unclassified foundations using LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of not U (unknown) for LEVEL1 indicate that an organization is not unknown, and values of T90 or T99 for NTEECC indicate that an organization is a named trust not elsewhere classified or a philanthropy, voluntarism & grantmaking foundation not elsewhere classified.
7.10 Subsector-specific private foundation
Description. Organizations in this category have 501(c)(3) private foundation status (from the IRS) and operate in a specific subsector, rather than mobilizing social sector resources and support or being a private corporate foundation, private grantmaking foundation, private operating foundation, general private foundation, federated campaign, or unclassified foundation (according to their NTEE codes).
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations are 501(c)(3) private foundations.
Public or private foundation status. These organizations are private foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. These organizations are eligible to receive tax-deductible charitable contributions.
Identification. We can identify subsector-specific private foundations using SUBSECCD (subsection code), LEVEL 1 (public charity or private foundation?), and NTEECC (NTEECC primary purpose). Values of 3 for SUBSECCD indicate that an organization is a 501(c)(3) organization; values of PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a private foundation; and values of anything other than T20, T21, T22, T23, T30, T31, T40, T50, T70, T90, or T99 for NTEECC indicate that an organization operates in a specific subsector, rather than mobilizing social sector resources and support or being a private corporate foundation, private grantmaking foundation, private operating foundation, general private foundation, federated campaign, or unclassified foundation.
7.11 Community foundation
Description. Organizations in this category do not have 501(c)(3) private foundation status (from the IRS) and have “community foundation” NTEE codes. Community foundations are “organizations that make grants for charitable purposes in a specific community or region. The funds available to a community foundation are usually derived from many donors and held in an endowment that is independently administered; income earned by the endowment is then used to make grants.”10
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations can be 501(c)(3) or 501not3 organizations. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Public or private foundation status. These organizations are public foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. Some organizations in this category (501(c)(3) organizations) are eligible to receive tax-deductible charitable contributions, and others (501not3 organizations) are not. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Identification. We can identify community foundations using LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of not PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a not private foundation, and values of T31 for NTEECC indicate that an organization is a community foundation.
7.12 General public foundation
Description. Organizations in this category do not have 501(c)(3) private foundation status (from the IRS) and have “public foundation” NTEE codes. Public foundations are “organizations that derive their funding or support primarily from the general public in carrying our their social, educational, religious or other charitable activities serving the common welfare. Although public foundations may provide direct charitable services to the public as other nonprofits do, their primary focus is on grantmaking.”11
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations can be 501(c)(3) or 501not3 organizations. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Public or private foundation status. These organizations are public foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. Some organizations in this category (501(c)(3) organizations) are eligible to receive tax-deductible charitable contributions, and others (501not3 organizations) are not. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Identification. We can identify general public foundations using LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of not PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a not private foundation, and values of T30 for NTEECC indicate that an organization is a public foundation.
7.13 Public single organization support
Description. Organizations in this category do not have 501(c)(3) private foundation status (from the IRS) and provide support to a single organization (according to their NTEE codes). They are “organizations existing as a support and fund-raising entity for a single institution.”12
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations can be 501(c)(3) or 501not3 organizations. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Public or private foundation status. These organizations are public foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. Some organizations in this category (501(c)(3) organizations) are eligible to receive tax-deductible charitable contributions, and others (501not3 organizations) are not. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Identification. We can identify supporting organizations that provide support to a single organization using LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of not PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a not private foundation; and values of A11, B11, C11, D11, E11, F11, G11, H11, I11, J11, K11, L11, M11, N11, O11, P11, Q11, R11, S11, T11, U11, V11, W11, X11, and Y11 for NTEECC indicate that an organization is a supporting organization that provides support to a single organization.
7.14 Public multi organization support
Description. Organizations in this category do not have 501(c)(3) private foundation status (from the IRS) and provide support to multiple organizations (according to their NTEE codes). They are “organizations that raise and distribute funds for multiple organizations.”13
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations can be 501(c)(3) or 501not3 organizations. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Public or private foundation status. These organizations are public foundations.
Exemption from federal income taxes. These organizations are exempt from federal income tax.
Eligibility to receive tax-deductible charitable contributions. Some organizations in this category (501(c)(3) organizations) are eligible to receive tax-deductible charitable contributions, and others (501not3 organizations) are not. (See Appendix A for more details about 501(c)(3) vs. 501not3 organizations).
Identification. We can identify supporting organizations that provide support to multiple organizations using LEVEL 1 (public charity or private foundation?) and NTEECC (NTEECC primary purpose). Values of not PF (private foundation) and not U (unknown) for LEVEL1 indicate that an organization is a not private foundation; and values of A12, B12, C12, D12, E12, F12, G12, H12, I12, J12, K12, L12, M12, N12, O12, P12, Q12, R12, S12, T12, U12, V12, W12, X12, and Y12 for NTEECC indicate that an organization is a supporting organization that provides support to multiple organizations.
7.15 4947(a)(1) charitable trust
Description. A 4947(a)(1) charitable trust is “a trust that is not tax exempt, all of the unexpired interests of which are devoted to one or more charitable purposes, and for which a charitable contribution deduction was allowed under a specific section of the Internal Revenue Code.”14
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations are 4947(a)(1) charitable trusts.
Public or private foundation status.The IRS treats 4947(a)(1) charitable trusts as private foundations unless they meet one of the requirements for being a 501(c)(3) public charity. This means the IRS subjects them to the same taxes, restrictions, and requirements of private foundations, which are more stringent than those it places on public charities.15 (See Appendix B for more details about public charities vs. private foundations.) 4947(a)(1) charitable trusts not treated as private foundations must file an annual Form 990-EZ or 990,16 and 4947(a)(1) charitable trusts treated as private foundations must file an annual Form 990-PF.17
Exemption from federal income taxes. 4947(a)(1) charitable trusts are not exempt from federal income tax.18
Eligibility to receive tax-deductible charitable contributions. 4947(a)(1) charitable trusts are eligible to receive tax-deductible charitable contributions.19
Identification. We can identify 4947(a)(1) charitable trusts that are treated as private foundations using SUBSECCD (subsection code). Values of 92 indicate that an organization is a 4947(a)(1) charitable trust treated as a private foundation. And we can identify 4947(a)(1) charitable trusts that are not treated as private foundations using SUBSECCD (subsection code). Values of 91 indicate that an organization is a 4947(a)(1) charitable trust not treated as a private foundation.
7.16 4947(a)(2) split-interest charitable trust
Description. 4947(a)(2) split-interest charitable trusts “make distributions to both charitable and noncharitable beneficiaries, while providing tax benefits to their donor.”20
Foundation/trust/grant-making organization status. Organizations in this category are foundations, trusts, or grant-making organizations.
Subsector. These organizations are 4947(a)(2) split-interest charitable trusts.
Public or private foundation status.The IRS treats 4947(a)(2) split-interest charitable trusts as private foundations.21 (See Appendix B for more details about public charities vs. private foundations.) 4947(a)(2) split-interest charitable trusts must file an annual Form 5227: Split-Interest Trust Information Return.22
Exemption from federal income taxes. 4947(a)(2) split-interest charitable trusts are not exempt from federal income tax.23
Eligibility to receive tax-deductible charitable contributions. 4947(a)(2) split-interest charitable trusts are eligible to receive tax-deductible charitable contributions.24
Identification. We can identify 4947(a)(2) split-interest charitable trusts using SUBSECCD (subsection code). Values of 90 indicate that an organization is a 4947(a)(2) split-interest charitable trust.
7.17 Unclassified
Description. Organizations in this category are unclassified.
Foundation/trust/grant-making organization status. We do not know whether these organizations are foundations/trusts/grant-making organizations.
Subsector. We do not know what subsector these organizations are in.
Public or private foundation status.We do not know whether these organizations are public or private foundations, or not foundations at all.
Exemption from federal income taxes. We do not know whether organizations in this category are exempt from federal income taxes.
Eligibility to receive tax-deductible charitable contributions. We do not know whether organizations in this category are eligible to receive tax-deductible charitable contributions.
Identification. Organizations who are not classified elsewhere in this taxonomy go into this category.
7.18 Appendix A. 501(c)(3) vs. 501not3 organizations
To qualify as a 501(c)(3) organization, an organization must exist to advance one of the following exempt purposes:
Charitable, which includes:
“Relief of the poor, the distressed, or the underprivileged;
Advancement of religion;
Advancement of education or science;
Erection or maintenance of 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.”
Religious
Educational
Scientific
Literary
Testing for public safety
Fostering national or international amateur sports competition
Prevention of cruelty to children or animals25
501(c)(3) organizations indicate which exempt purpose(s) they advance when they file Form 1023 or 1023-EZ to apply for recognition of exemption from federal income tax (aka “tax-exempt status”) (Service 2014, 2020).
There are two major tax advantages to having 501(c)(3) status:
- 501(c)(3) organizations are exempt from federal income tax; and
- They can receive tax-deductible charitable contributions (Service 2018).
501(c)(3) organizations are either public charities or private foundations.
7.19 Appendix B. 501(c)(3) public charities vs. 501(c)(3) private foundations
To qualify as a 501(c)(3) public charity, rather than a 501(c)(3) private foundation, an organization must be one of the following:
A church, convention of churches, or association of churches
A school
A hospital or cooperative hospital service organization
A medical research organization operated in conjunction with a hospital
An organization operated for the benefit of a college or university that is owned or operated by a governmental unit
A federal, state, or local government or governmental unit
An organization that normally receives a substantial part of its support from a governmental unit or from the general public
A community trust
An agricultural research organization operated in conjunction with a land-grant college or university or a non-land-grant college of agriculture
An organization that normally receives more than 33 and 1/3% of its support from contributions, membership fees, and gross receipts from activities related to its exempt functions and receives no more than 33 and 1/3 percent of its support from gross investment income and unrelated business taxable income from businesses acquired by the organization after June 30, 1975
An organization organized and operated exclusively for testing for public safety
A 509(a)(3) supporting organization, including the following types:
Type I – those operated, supervised, or controlled by the supported organization(s) by giving the supported organization(s) the power to regularly appoint or elect a majority of the directors or trustees of the supporting organization
Type II – those supervised or controlled in connection with the supported organization(s) by having control or management of the supporting organization vested in the same persons that control or manage the supported organization(s)
Type III functionally integrated – those operated in connection with, and functionally integrated with, the supported organization(s)
Type III non-functionally integrated – those operated in connection with the supported organization(s) that are not functionally integrated (Service 2022)
501(c)(3) organizations indicate whether they are a public charity or a private foundation when they file Form 1023 or 1023-EZ, and if they are a public charity, they must select the reason they are not a private foundation (Service 2014, 2020). 501(c)(3) public charities also select the reason they are not a private foundation when they file Schedule A (Form 990) every year (Service 2022). Private foundations that later want to be reclassified as public charities must terminate their private foundation status and apply for public charity status.26
The IRS imposes several taxes, restrictions, and requirements on private foundations that it does not place on public charities:
Private foundations must pay excise taxes on their net investment income.
Private foundations must pay excise taxes on acts of self-dealing with disqualified individuals.
Private foundations must distribute a portion of their income annually for charitable purposes.
Private foundations must pay excise taxes on any excess holdings above 20% that it and all of its disqualified individuals have in the voting stock of a business enterprise.
Private foundations must pay excise taxes on jeopardizing investments (i.e., those that jeopardize the carrying out of exempt purposes).
Private foundations must pay excise taxes on expenditures that do not further exempt purposes, such as lobbying.27
Most 501(c)(3) public charities must file an annual Form 990-N, 990-EZ, or 990.28 501(c)(3) private foundations must file an annual Form 990-PF.29