What is the classification of a feeder organization that carries on a trade or business for the benefit of an exempt organization?

The correct classification of a feeder organization that operates a trade or business for the benefit of an exempt organization is a private foundation. A feeder organization typically refers to an entity that conducts commercial activities to provide financial support or revenue to a tax-exempt organization, such as a charity or other non-profit.

Private foundations are classified as non-profit entities that have specific IRS regulations governing their operations, including how they distribute their funds. Feeder organizations, by their nature, engage primarily in generating income through business activities to support an exempt organization, which aligns closely with the characteristics of a private foundation.

In contrast, public charities are typically organizations that actively engage in charitable activities and receive a significant portion of their funding from the public. Non-profit organizations encompass a broader category and include various types of organizations that operate without profit motives, but this classification may not necessarily apply to the specific context of a feeder organization. While tax-exempt organizations include both public charities and private foundations, the specific characteristics and operational purpose of a feeder organization align more directly with the definition of a private foundation.