All foundations are non-profit organizations that have been specifically established to support charitable efforts. That said, there are significant differences among foundations - in their structure, in the way they acquire and disperse funds, and, of course, in their missions and goals.
Most foundations are private foundations – trusts that have been created by an individual, family or company for charitable purposes. A common type of private foundation is the family foundation. A family foundation’s board may include both family and non-family members. Private foundations range in size and giving from very small to quite large. Some private foundations – like, say, the Hesta Stuart Christian Charitable Trust, supporter of Methodist churches – are very specific in their mission and funding. Others are very broad in scope – like the Ford Foundation, which famously describes itself as “a resource for innovative people and institutions worldwide.”
A community foundation administers numerous charitable trust funds established by a variety of individual, family, and sometimes, corporate donors. The purpose of a community foundation is to pool resources from many donors in order to address the needs of a specific region. The first community foundation was established in 1914 to help people without vast wealth participate in philanthropy by joining together with others.
Donors establish funds because:
- They want to leverage their giving by joining with other philanthropic individuals in support of their community;
- They want to utilize the support and financial management services offered by the foundation.
Individual donors who establish funds can stipulate specific funding interests (which do not need to be tied to the local community). In addition, the community foundation as a whole generally has priorities which it supports through a discretionary fund (e.g., the foundation may focus on affordable housing and programs for underserved youth). Because of the services they offer, community foundations are the fastest growing segment of philanthropy in the country. Today, there are more than 600 community foundations nationwide, holding more than $15 billion in combined assets and contributing more than $1 billion to charities every year.
A corporate foundation is an independent organization that receives its funding from the company with which it is associated. While corporate foundation support is, arguably, good for the bottom line, it is distinct from dollars spent specifically for marketing or advertising. Once assets have been given to the foundation, they cannot revert to the corporation and are subject to legal rules about the percentage which must be contributed annually. As an alternative, many corporations run “corporate giving programs” which offer a higher level of flexibility, allowing the company to determine on a quarterly or annual basis how much they will contribute to charity. Some companies maintain both a corporate foundation and a corporate giving program.
While the definition is a little fuzzy, a public foundation is a non-governmental organization that:
- operates grants programs benefiting unrelated organizations or individuals as one of its primary purposes
- is not a private foundation
While private foundations usually get their money from a single source, public foundations get their assets from multiple sources and must continue to seek money from diverse sources in order to retain their status as public. Examples of public foundations include state humanities councils; organizations such as “Women’s Funds” that solicit donations and redistribute them to specific communities or groups through grants; and the United Nations Foundation, which raises money to support UN programs and related initiatives.
This is a nonprofit that invests nearly exclusively in programs that it conducts. For example, an operating foundation might fund and run a leadership development program or might support and operate a summer camp for kids.