Account Types
A private foundation differs from a public charity primarily in that it:
Private foundation: single source funding, board-controlled, 5% annual distribution.
Complete Analysis & Legal Rationale
Private foundations are typically funded by a single individual, family, or corporation and controlled by a board that makes grants to other charitable organizations. Public charities receive funding from multiple sources.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Private foundations make grants to other charities.
Matches the verified teaching point in the explanation.
Private foundations are subject to IRS rules including excise taxes.
Private foundations must distribute at least 5% of assets annually.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.