A Section 501(c)(3) charity which is classified as a private foundation must make qualifying distributions (which can include certain administrative costs) of at least 5% of its net investment assets (not its income) each year or pay an excise tax for failure to do so. If it fails to do so repeatedly, the IRS can tax it out of existence.

 

There is no percentage requirement for expenditures by a public charity, although it must carry on a legitimate charitable program or it will eventually lose its exempt status.