What is a foundation?
A foundation is an entity that is established as a nonprofit corporation or a charitable trust, with a principal purpose of making grants to unrelated organizations or institutions or to individuals for scientific, educational, cultural, religious, or other charitable purposes.
Characteristic Types of Foundation:
There are two characteristic types. One is Private foundations and another is public foundations. The most common distinguishing characteristic of a private foundation is that most of its funds come from one source, whether an individual, a family, or a corporation. A public foundation, in contrast, normally receives its assets from multiple sources, which may include private foundations, individuals, government agencies, and fees for service. Moreover, a public foundation must continue to seek money from diverse sources in order to retain its public status.
A foundation is a nonprofit organization that supports charitable activities in order to serve the common good. Foundations are often created with endowments-money given by individuals, families or corporations. They generally make grants or operate programs with the income earned from investing the endowments.
What Are the Different Types of Foundations?
Independent Foundations: Independent foundations are the most common type of private foundation. An individual, a family or a group of individuals generally founds them. The donor or members of the donor's family, a type often referred to as a family foundation or by an independent board, may operate them.
Corporate foundations are created and funded by companies as separate legal entities, operated by a board of directors that is usually comprised of company officials. Corporations may establish private foundations with endowments, make periodic contributions from profits, or combine both methods to provide a foundation's resources. Some companies operate in-house corporate giving programs, which unlike corporate foundations are under the full control of the company and are not required by law to follow the same regulations. Many corporations maintain both a foundation and a corporate giving program.
Community / Public Foundations:
Community and other public foundations are publicly supported foundations operated by, and for the benefit of, a specific community or geographic region. They receive their funds from a variety of individual donors, and provide a vehicle for donors to establish endowed funds without incurring the costs of starting a foundation. A governing body or distribution committee representative of community interests administers Community/public foundations. There is also a type of foundation that does not generally make grants, called an operating foundation. The majority of an operating foundation's funds are expended to operate its own charitable programs.
What Limits Are There on Foundation Grant making?
Some foundations have broad discretion regarding the charitable causes to which their grants can be directed. Others are sharply limited, often legally, by the mandate of the foundation donor. Some foundations are restricted to making grants only to specific causes; others must restrict their grant making to a specific geographic area.
How Are Foundations Regulated?
Foundations are governed by stricter regulations than public charities, which generally raise money from the public to operate institutions or programs. Both foundations and public charities might use the term "foundation" in their titles, but very different laws apply to each.
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