Which of the following is a primary difference between a Public Charity and a Private Foundation?

Answer options:

Public charities receive broad public support, while private foundations are typically funded by a single source.

Private foundations are tax-exempt, but public charities are not.

Public charities can engage in unlimited lobbying.

Private foundations do not file annual returns.

How to approach this question

Public Charity = Money from everyone (Red Cross). Private Foundation = Money from one family/company (Gates Foundation).

Full Answer

A.Public charities receive broad public support, while private foundations are typically funded by a single source.✓ Correct

Public charities (IRC §509(a)) generally receive more than one-third of their support from the general public or government. Private foundations are typically funded by a single individual, family, or corporation and are subject to stricter rules (excise taxes, distribution requirements).

Common mistakes

Thinking the difference is about the type of work they do.

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