Types of Foundations
For more information go to The Foundation Center.
Community foundation: A 501(c)(3) organization that makes grants for charitable purposes in a specific community or region. The funds available to a community foundation are usually derived from many donors and held in an endowment that is independently administered; income earned by the endowment is then used to make grants.
Although a community foundation may be classified by the IRS as a private foundation, most are public charities and are thus eligible for maximum tax-deductible contributions from the general public. See also 501(c)(3); public charity.
A community foundation may administer donor-advised funds and diversity-focused funds where the grants may only go to specific causes or projects for a specific group of people.
Community fund: An organized community program that makes annual appeals to the general public for funds that are usually not retained in an endowment but are instead used for the ongoing operational support of local agencies. See also federated giving program.
Corporate foundation/Company-sponsored foundation: A private foundation whose assets are derived primarily from the contributions of a for-profit business. While a company-sponsored foundation may maintain close ties with its parent company, it is an independent organization with its own endowment and as such is subject to the same rules and regulations as other private foundations. An employee affinity fund may exist as part of a corporate foundation. See also private foundation.
Corporate giving program: A grantmaking program established and administered within a for-profit corporation. Because corporate giving programs do not have separate endowments, their annual grant totals generally are directly related to company profits. Corporate giving programs are not subject to the same reporting requirements as corporate foundations.
Diversity-Focused Fund: A grantmaking organization that concentrates its support to help certain racial, ethnic or tribal communities, or groups defined by gender, by sexual identity or by an isolated rural or frontier location. It may be organized as an independent, family or private foundation; as a giving circle or affinity group; or affiliated within a traditional philanthropy such as a community or corporate foundation. See the Racial, Ethnic and Tribal Philanthropy Knowledge Center.
Family foundation: An independent private foundation whose funds are derived from members of a single family. Family members often serve as officers or board members of family foundations and have a significant role in their grantmaking decisions.
Federated giving program: A joint fundraising effort usually administered by a nonprofit "umbrella" organization that in turn distributes the contributed funds to several nonprofit agencies. United Way and community chests or funds, the United Jewish Appeal and other religious appeals, the United Negro College Fund, and joint arts councils are examples of federated giving programs. See also community fund.
501(c)(3): The section of the tax code that defines nonprofit, charitable, tax-exempt organizations; 501(c)(3) organizations are further defined as public charities, private operating foundations, and private non-operating foundations. See also operating foundation; private foundation; public charity.
General purpose foundation: An independent private foundation that awards grants in many different fields of interest. See also special purpose foundation.
Health conversion foundation: Federal law requires that proceeds from the sale of assets of tax-exempt entities go to charity. There are a number of ways this requirement can be met. One is the establishment of a foundation to benefit the community previously served by the nonprofit. Sometimes a foundation is formed when nonprofit hospitals and HMOs convert to for-profit status. While most new health foundations are dedicated to healthcare, they typically have adopted a broad definition of health and sometimes support much wider community purposes. New health foundations are rapidly becoming major financial forces in their local communities and beyond.
Independent foundation: A grantmaking organization usually classified by the IRS as a private foundation. Independent foundations may also be known as family foundations, general purpose foundations, special purpose foundations, or private non-operating foundations. See also private foundation.
Operating foundation: A 501(c)(3) organization classified by the IRS as a private foundation whose primary purpose is to conduct research, social welfare, or other programs determined by its governing body or establishment charter. An operating foundation may make grants, but the amount of grants awarded generally is small relative to the funds used for the foundation's own programs. See also 501(c)(3).
Private foundation: A nongovernmental, nonprofit organization with funds (usually from a single source, such as an individual, family, or corporation) and program managed by its own trustees or directors. Private foundations are established to maintain or aid social, educational, religious, or other charitable activities serving the common welfare, primarily through the making of grants. See also 501(c)(3); public charity.
Public charity: A nonprofit organization that qualifies for tax-exempt status under section 501(c)(3) of the IRS code. Public charities are the recipients of most foundation and corporate grants. Some public charities also make grants. See also 501(c)(3); private foundation.
Special purpose foundation: A private foundation that focuses its grantmaking activites in one or a few areas of interest. See also general purpose foundation.