
Episode #174
174: Click, Click, You're Done | Public Charity vs. Private Foundation
You got your 501(c)(3) letter, so you're all set... right? Not so fast. There's a second designation buried in that letter, and if it's not correct it could derail your grant applications, your tax filings, and your whole plan. Meghan and I break down one of the most misunderstood distinctions in the nonprofit world: public charity versus private foundation. Both are 501(c)(3)s, but the difference between them changes how you file, what grants you qualify for, and how you're allowed to operate. We tackle two listener questions from founders who accidentally ended up in the wrong bucket without even knowing it. Real Listener Question: "One founder gives a lot of money to the nonprofit they started because it makes financial sense, and now their CPA is warning that this could turn the org into a private foundation. What does that mean? Another founder did all the paperwork themselves, got their 501(c)(3) letter, and then had a grant application rejected because they're "not a public charity." They're confused. Doesn't the letter say 501(c)(3)?" Meghan and I dig into the public support test, why funding your own nonprofit can accidentally make you a private foundation, and how to check your real status before it comes back to bite you. What You'll Learn: What the 501(c)(3) status actually is and why it has subcategories The difference between a public charity and a private foundation What the public support test is and why you need a third of your money from public sources How to look up your real status using the IRS exempt organization search Why private foundations file a 990-PF, not a regular 990 Bottom line: It's not "public charity good, private foundation bad." It's about which one fits the work you're actually trying to do. Know your real status and don't let a DIY paperwork shortcut haunt you three years down the line. Resources from this Episode Previous Episode: https://birkenlaw.com/charity-therapy-podcast/ct173-money-when-nonprofit-closes Episode Transcript: https://birkenlaw.com/wp-content/uploads/2026/09/CT174_Transcript.pdf Connect with Us Jess Birken: https://www.linkedin.com/in/jessbirken/ Meghan Heitkamp: https://www.linkedin.com/in/meghan-heitkamp-829254115/ Listen & Engage Listen on Apple Podcasts | Spotify | YouTube | Amazon Music Rate & Review on Apple Podcasts : Click "Ratings and Reviews" then "Write a Review" Send us your nonprofit questions: https://birkenlaw.com/podcast/#podcast-story Stay Connected Sign up for the Birken Law Email list: https://birkenlaw.com/signup/ Follow us on Facebook , Instagram , Twitter






